Viewpoint: The Metaverse – Hype vs Reality


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The hype around the metaverse is matched by the millions of dollars being invested by big tech and big business.

With Walmart recently announcing its entry into online gaming platform Roblox, the message to both B2C and B2B companies is to get involved, but what exactly? There is confusion about what the word actually means and some actively try to avoid it in favor of a clearer definition. For example, Disney talks about next-generation storytelling and an experiential lifestyle platform, creating its own story around the future of entertainment, while investors in Meta may be casting a shadow of doubt on Mark Zuckerberg’s vision after a disappointing run of results that made billions. wiped out the market value of the company.

So if it’s hard to have a conversation where everyone is on the same wavelength, how can our industry come up with special metaverse insurance solutions?

We may have hundreds of years of experience in property insurance, but how do we approach covering property that exists as a non-fungible token (NFT) and the contents of a seaside meta-villa including luxury goods such as a virtual Birkin bag. And since many of us can’t live without our pets, virtual pet ownership is now a reality, so what kind of coverage should pet insurers provide?

“Understanding the intersection of physical and digital worlds and evolving insurance policies to provide solutions now is where the current opportunity lies – and then adapting those solutions to evolve with technology will help keep our industry ahead.” – Michael Brunero

Instead of buying into the hype, I think the insurance industry should try not to look too far into the future.

Essentially, we’re seeing a handful of tech companies providing immersive worlds where users can interact with others — and if you sum that up, it’s really just the internet entering a new phase in 3D. So let’s take a look at the opportunities, the pitfalls and the problems surrounding this new phase.

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The opportunity lies in understanding the basic technologies in the metaverse. And technology doesn’t appear overnight in a big big bang. It mostly stems from existing technology, so we should ask ourselves whether we currently provide enough policies to manage the complex exposures of virtual and augmented reality, where digital and physical worlds are already combining in a new way.

For example, what new risks come with esports that may not exist with traditional sports and are we providing coverage that is fit for purpose? If not, where should we improve? The worlds of healthcare and finance have already embarked on their transformative journey of digitization, so insurers now need to focus on providing adequate solutions before considering the compelling potential of these industries that the metaverse can afford in the future.

Understanding the intersection of physical and digital worlds and evolving insurance policies to provide solutions now is where the current opportunity lies – and then adapting those solutions to evolve with technology will help keep our industry ahead of the curve.

But as we all know, there are pitfalls along with opportunities.

We already see legal issues in these new virtual worlds that the insurance industry needs to reckon with – but again, before we look too far into the future and try to create policies for virtual properties that have yet to materialize in a great way, we need to focusing on solving the problems we have for customers now to provide the platform for the future.

How would existing policies react if a customer claims they have been attacked in a virtual world? Crazy as that may sound, a researcher studying user behavior in Meta’s Horizon World through her VR headset was sexually assaulted within an hour — apparently while other users watched. This has resulted in much debate about how virtual experiences are just as traumatizing as they are in the physical world due to the intense, immersive nature of the virtual world. But immersive technologies have not led to intimidation in the digital world; social media has long been a breeding ground for bullying and stalking, so this is simply the evolution of existing issues and we need to question whether current policies provide adequate protection.

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Just as more industries are delivering products and services through technology platforms, the old question of “is software a product or a service” is resurfacing. The only relevance this has is which insurance policy will take on the claim, so if we haven’t developed solutions yet then our industry is well behind the curve given how long software has been in our daily lives.

And exposure to intellectual property (IP) goes hand-in-hand with any technological advancement – whether it’s a brand new development or a traditional company digitizing its business and proposition. It’s not just about managing and protecting IP; as competitors enter new virtual worlds, they will fight hard for market share. IP disputes are almost self-evident. It’s an area the industry has been working on for decades, but it’s still an emerging risk and one that we need to get right now if we’re to provide adequate solutions in the virtual world.

Going back to all the hype surrounding the metaverse, NFTs are often heralded as the answer to virtual asset ownership – yet NFT sales fell 60% in Q3 2022. Opensea, the world’s largest NFT marketplace, has said that more than 80% of NFTs created for free on their platform were plagiarized works, fake collections or spam. This could mark a turning point, ending speculation associated with these assets and ushering in an era where we can more accurately assess their long-term place – if any.

Diving into NFTs would be problematic for insurers given their volatility. Rather, the wiser path lies in having a strategy around the evolution of assets that can play a role in the metaverse.

The digital age has spawned industries that were previously unimaginable. The huge opportunity to become famous as a fashion blogger, Tik Tok star or Youtuber is confirmed by an influencer marketing industry that is expected to grow to $16.4 billion this year.

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This is a lot of money, but many of these businesses that started from home with an iPhone have not recognized the risks of operating online. There are plenty of examples of influencers getting ransoms for their accounts, not thinking that a cyber-attack on their company could cripple it. Other influencers have faced IP infringement lawsuits for using unlicensed images or music without permission.

Creating fit-for-purpose policies for these sectors and finding ways to interact with new audiences often unaware of their varied exposure is a priority. This is all the more important as we try to understand the new ventures the evolution of the Internet will bring.

The biggest challenge for insurers right now is separating fact from fiction, hype from reality, worrying about building products or solutions for an industry that won’t catch on, or that needs more time to mature. evolve than might be expected.

Brands are focusing on creating a presence in the metaverse to connect with and build their customer base for the future. With so much innovation and creation in the space, the greatest asset companies have is their IP and this will increasingly lead to disputes with the core of a company at stake. Understanding the importance of protecting these assets is a real learning opportunity for customers in the space.

My view is that we should keep our finger on the pulse, but be careful, not be too trigger happy and focus on the value we can provide now. Go back to insurance 101: know your customer, who they are, what they are really trying to achieve, what their risks are. Trying to build metaverse-specific products without really understanding what that means wastes time, energy, and resources for very little return.