Ready Insurer One? How insurance companies can become the heroes of the metaverse

This article was originally published as an article on WARC. To view the original article, click here.

The metaverse.

Is it the latest tech buzzword that will come and go before you have a chance to understand it? Or maybe a legless Mark Zuckerberg avatar, floating in space? What about a new reality where humans shift from living in the physical world to a digital existence filled with immersive experiences?

Let’s skip options one and two, since I hope to demonstrate that the first is incorrect and the second is, quite frankly, a terrifying image that no one should be subjected to. 

You’re Googling it, so I’ll wait.

Now, then. The term metaverse was first coined in the early 1990s, in Neal Stephenson’s sci-fi novel, Snow Crash. Since then, it’s made appearances in films like The Matrix and novels like Ready Player One. Recently, however, it seems to have truly crossed into the mainstream, with countless articles, videos and news stories expounding on our future in the metaverse.

My introduction to this brave new world was a far humbler one. A few years ago, when my son got into gaming, all anyone his age could talk about was Fortnite. For the uninitiated, Fortnite is an online game where players from around the globe do battle on a virtual island. When you first join the game, you’re given a generic avatar. Using V-Bucks, the in-game virtual currency, you can purchase accessories for your avatar: clothing (skins), dance moves (emotes) and tools (pickaxes). 

As the game developed, so too did the virtual world. Spaces were created in the game where players could just hang out. Special live events were created for players to attend, which quickly evolved into live virtual concerts by performers like Ariana Grande and Travis Scott, the latter of whom amassed a live audience of almost 30 million. 

Right before my eyes, my son had entered an early-stage metaverse. Two, in fact, since he was also an avid Roblox player. 

Roblox, like Fortnite, is avatar-based and has a virtual currency (Robux) that allows players to purchase all sorts of customizations for their characters.

Both examples are games, which is no coincidence. Gaming has been described by The New York Times tech columnist Kevin Roose as an “on-ramp to the metaverse.” And as complex and well-developed as both games are today, they’re just the beginning. 

Last fall, Fortnite partnered with Balenciaga for a line of high-fashion, virtual clothing. Nike recently purchased virtual sneaker and collectible creator RTFKT. And the latest chatter concerns the potential buying and selling of metaversal real estate. Today, Fortnite is a literal (virtual) island. Why not build some offshore land for a condo development?

Which begs the question: How are we going to keep all this virtual property safe?

My young son has already been the victim of fraud and theft in these virtual worlds, for which there was very little recourse. In his case, the theft was quite minor, costing him some of his virtual Roblox assets, but the global scale of this type of crime is growing exponentially. Internet security firm Kaspersky reported that gaming-related crime increased by 50% in 2020 – and that’s just gaming. As this new frontier expands, so too will the criminal opportunities.

Let’s use cryptocurrency-related theft as a potential barometer, since crypto will increasingly become the standard currency of the metaverse. In 2021, digital thieves made off with $14 billion in cryptocurrency. 

For now, in-game assets and virtual currency remain somewhat separate, but the ever-developing metaverse will continue to link them more closely, leading to more and more opportunities for theft.

But wait: You’re thinking, what about the blockchain? Isn’t the blockchain supposed to create unique, secure pieces of code to make theft nearly impossible? The answer is, yes – and it does – but it can’t always protect against the ingenuity of human fraudsters.

Who will save the current and future denizens of this limitless new landscape?

Enter our brave hero: Insurance companies.

When it comes to marketing and advertising, the insurance industry has never been shy to colour outside the lines. In a heavily regulated category and with a product offering that is anything but sexy, insurance companies have found all sorts of fun ways to stand out. From the anthropomorphic oddity that is the GEICO Gecko, to the anarchic delight of Allstate’s Mayhem, to the secret sociopathic vibes of Progressive’s Flo (I’m not the only one seeing that, am I?), it’s a category that – perhaps ironically – isn’t afraid of a little risk.

So, why not jump into the metaverse with both feet?

But how? How can a very tangible real-world offering translate into this new virtual existence?

Well, let’s start with the most obvious option: Virtual Property and Casualty Insurance. Property and Casualty, or P&C, is industry speak for home and auto insurance, with the casualty representing the liability insurance provided if you’re found at fault in an accident that causes injury or death. As interesting as it would be to have casualty insurance in a game like Fortnite, for now we’ll focus on the property side of the equation.

One way to do so is to imagine one’s metaverse existence as a “property”. This might eventually include things like virtual property or real estate, but would also include all the assets (skins, clothing, accessories, etc.) that are owned and kept in the virtual space. Even today, someone’s Fortnite locker could include thousands of dollars’ worth of virtual goods. As gaming evolves – and more of life’s experiences become metaversal – virtual property insurance could be less luxury than necessity.

As a bridge to this new virtual offering, insurance companies could look at amending their existing policies, specifically in terms of scheduled property. Scheduling is arranged for items that exceed the standard limits of insurance policies, like jewelry or collectibles. 

Metaverse scheduling would function in a very similar way. Those new, rare Air Jordans you purchased for your avatar could be added to an existing home insurance policy to cover the virtual asset in case of theft. This, of course, would require you to have (or be listed on) an existing insurance policy, so it’s not a forever solution. But it could be a great way for insurance companies to dip their toe in the virtual waters.

Of course, now, the question becomes: Where would one acquire said insurance? Most insurance companies are divided into two channels: direct and agent. Direct insurance is handled online with the purchaser navigating a site to build their policy quote, while agent insurance is conducted with the assistance of a trained insurance agent, either virtually or in person. While purchasing insurance for the metaverse could easily be handled through direct channels, there are far more intriguing opportunities for the agents.

We’ve all walked by an insurance booth at a local event, where friendly agents are eager to hand out advice and branded swag. So why not do the same in the virtual realm? It’s an opportunity to connect one-on-one and provide relevant tips to a massive new (and young!) audience. But how to get them to stop at your virtual booth? The swag. The swag’s the thing. While a water bottle or bucket hat might catch the eyes of a few people in the real world, a limited edition in-game/in-world bucket hat could have lines queuing around the virtual corner.

And if that doesn’t draw them in, I can’t think of a better character to enter the Fortnite Battle Royale than that dead-eyed, “she was always so quiet” Flo. If Wendy can enter the virtual world to destroy freezers, I know Flo can get in there to encourage safe driving and drum up some business!

As with most new developments in human existence, how the metaverse evolves is difficult to predict. Some imagine a utopian future, while others envision a dystopian hellscape. I suspect it will fall somewhere in the middle. But wherever it lands, I definitely think it would be nice to have a little insurance.