American writer and entrepreneur Stewart Brand said: “Once a new technology rolls over you, if you’re not part of the steamroller, you’re part of the road.” In this digital-first age, this quote has never been more apt, reminding us that those who fail to adapt to changing circumstances will be left behind.
Today the insurance industry is at an important crossroads. Traditional or “legacy” insurance companies have been slow-moving when it comes to adopting digital technologies, which has resulted in insurtech firms gaining a foothold. The Asia Pacific region is home to at least 335 insurtech companies, with Southeast Asia as the region’s largest market led by Singapore.
While legacy insurers have been slow to go digital, there is no reason to remain on the sidelines whilst emerging insurtech rivals explore the ways in which new technology such as the blockchain-based Web3 could be used in their businesses. Another part of the Web3 wave is the metaverse which refers to a network of virtual, interactive worlds.
Whilst the Web3 and Metaverse are still very much in its relative infancy , I want to highlight three ways that the metaverse can bring added value to the insurance industry, and to enhance the impact on customer experience.
New Product Development
Previously, digital was thought of as being temporary or transient due to its non-physical nature. However, new technologies such as non-fungible tokens (NFTs) have shown that the modern consumer places value on their digital assets and their security. As such, new technology has allowed insurers to develop new products that cater to those interested in insuring their digital assets.
One such firm that has embraced digital protection is AON: The legacy insurer offers digital asset and blockchain insurance solutions, including Crime and Specie Insurance for the theft of digital assets. (Specie is the name given to policies covering tangible, high value items, such as collectibles, and has been the policy type used to protect the majority of cryptoassets.)
Meanwhile, Chicago-based cryptoasset insurer Evertas expanded to Asia just a few months ago, adding Hong Kong and Australia to the markets where they provide cryptoasset protection.
Due to the traceable and non-editable nature of the data, blockchain technology can help to highlight and eliminate common sources of fraud in the insurance industry. Singapore is no stranger to insurance fraud, with reports of such claims tripling in 2020, as compared to 2018, largely due to fraudulent health insurance claims. However, as data within a blockchain is traceable, insurers will be able to see if a customer has made multiple claims from the same incident, even if the claim was made through different companies. Looking ahead, it will be interesting to see how insurance companies can utilize the blockchain and NFT’s exist to further innovation within the insurance industry.
Expanding Product Distribution Avenues
Undoubtedly, one of the biggest and most obvious ways that new technology, and, the metaverse, can be used by insurers is in the distribution, with insurers creating their own virtual meeting spaces and workshops aimed at targeting younger, more tech-savvy audiences.
The virtual human, Hannah, will support customer service in Hanwha Life Insurance’s metaverse (Source: TV Chosun Program)
For example, South Korean firm Heungkuk Life Insurance recently opened a ‘virtual counseling window’ in the metaverse, allowing customers to visit the agency using a virtual reality headset. Hanwha Life Insurance in Korea took things further by deploying “Hannah”, a virtual planner designed to help out not only customers seeking a more tailored service but also as a way to relieve the workload of the insurer’s staff.
Additionally, the metaverse can also be used to host personal one-to-one conversations with customers who prefer using a 3D virtual space instead of a telephone or video call. For example, FTLife Insurance in Hong Kong partnered with blockchain company Advokate to launch its FTLife tower in the metaverse, enabling users to explore the virtual tower with their avatar, and interact with FTLife representatives from time to time.
Payments, Claims, And Underwriting In The Metaverse
Along with marketing, the biggest area that new technology will affect in insurance is within the realms of payments, claims and underwriting.
Cryptocurrency is one of the biggest tentpoles of Web3 and is a vital part of our digital future. Following the coronavirus pandemic the popularity of crypto has skyrocketed. In response to the increasing popularity of crypto, AXA Switzerland have since enabled private customers to pay for select premiums with bitcoin.
In addition to paying for premiums, the blockchain technology that powers cryptocurrency can also be used for claims and underwriting.
The blockchain technology that powers crypto enables automated real-time data collection, which could dramatically speed up the claims process. For example, in 2022, Chinese financial services company Ant Group launched a blockchain-based digital operation platform for insurance companies in China named ‘Xingyun’, which can identify 107 types of verification documents with an identification accuracy rate above 95 per cent.
Meanwhile, the process of underwriting can also become much more transparent, quicker and efficient through the use of blockchain technology as well. This was demonstrated by a landmark, three-way collaborative effort by IBM, AIG and Standard Chartered to create the world’s first multinational insurance policy.
The list above is by no means exhaustive, and there are still many other compelling cases to be made for insurers who are willing to embrace technologies like the metaverse, crypto, and more. Insurers who make the effort to understand and embrace these trends will be poised to gain an advantage in an increasingly competitive space.
Andy Male is the Client Partner at Publicis Sapient
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