Thursday, 27 Jan, 2022

The Metaverse and Insurance: How Will it Work?

In tech circles, you may have heard whispers of the mysterious-sounding “Metaverse.” Facebook unveiled its plan to go “Meta” in October 2021, but..

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In tech circles, you may have heard whispers of the mysterious-sounding “Metaverse.”

Facebook unveiled its plan to go “Meta” in October 2021, but there are swirling uncertainties as to the actual features and implementation of this new technology, which promises a level of virtual reality and interconnectability that was previously unimaginable.

Large amounts of capital are being pumped into the Metaverse. It could even become an integral part of Web 3.0, together with blockchain and Bitcoin. When it comes to regulatory issues like insurance concerns, however, it can be difficult to tell where this new technology is heading. 

Agencies with digital insurance features currently grow 60% faster than their rivals, but will this standard continue to reign true in the budding Metaverse? In this article, we’ll explore intellectual property in a digital setting, as well as digital assets in the Metaverse, while addressing how the Metaverse and insurance can coexist.

Intellectual Property in a Digital Setting

Intellectual property is often intangible, but that doesn’t render it inherently valueless. In fact, securing intellectual property, like protecting a business idea or fashion design, is essential to promoting economic growth and innovation. Traditionally, we’ve come to think of intellectual property and business assets in the physical world, but everything changes with the introduction of the Metaverse.

Recovering from an intellectual property crime can be difficult even in the most clear-cut of cases, oftentimes requiring victims to reach an agreement with the offending party or pursue legal action. In the new Metaverse, someone has to insure and recover this data, and it makes sense for third-party insurance companies (or their virtual equivalents) to head up the task force.

Digital Assets/Records

You wouldn’t open a brick-and-mortar business without first taking care to properly protect your current and future assets. The same holds true in the Metaverse, where cybersecurity should be a top priority. You don’t want to find yourself among the victims of cybercrime, so consider hiring a cybersecurity professional and taking out an insurance policy to protect your virtual assets in case frontline security mechanisms fail. It’s also wise to learn about identity theft protection tips and other measures you can take in the event of a security breach.

In an entirely digitized environment, new kinds of business assets will emerge that could upend traditional ways of looking at insurance. These assets could include things like cryptocurrencies, virtual objects or tools, as well as homes, businesses, and health. Smart homes connected to the Metaverse are vulnerable to data hacks and other digital risks, which Metaverse users may seek recompense for after the loss or destruction of their data or virtual property. 

It could seem silly to place so much emphasis on virtual items, but the value of these items lies in the meaning we’ve assigned to them. In the physical world, land was not thought of as property until we declared it such and placed a value on it. In an increasingly digital, decentralized world, it follows that we will continue to up the value of digital assets, making it crucial for owners of said assets to have business and personal protections to safeguard against loss or theft — just as we would in the physical world.

Digital Insurance

Digital insurance is one of the solutions that could help people prevent and recover from digital losses. Within the insurance industry itself, the Metaverse could change operations drastically, allowing businesses to apply for workers’ compensation insurance or access critical documentation all in one location. AI and other technological innovations promise to play a big role in this transformation.

But how much of this is speculation? After all, for this vision to take off, there needs to be collaboration amongst insurance companies, the government, and other relevant entities. There also needs to be a shift in perspective, as today’s business insurers aren’t all that keen to invest in the budding infrastructure behind the Metaverse.

However, outdated mentalities on the part of insurance companies will have no real impact on the expansion of the Metaverse. With or without the cooperation of traditional institutions, the Metaverse will forge onward, backed by peer-to-peer exchange systems and decentralized technology. The question is not whether or not digital insurance will become standard practice in the Metaverse, but rather who will rise to the challenge of offering such insurance policies. 

The Future of Metaverse & Insurance

Although the Metaverse is currently small, it has big ambitions. If current insurance institutions prove unable or unwilling to adapt to virtual conditions, they may find themselves falling by the wayside. At a bare minimum, insurance companies should be building parallel systems that they can eventually use to transfer their daily activities to the virtual world. Designing immersive user experiences and streamlining digital processes will also help prime insurance brands and their customers flourish in an increasingly digital future.

In the Metaverse, we predict the insurance industry will re-emerge with a slightly refreshed facade, ready to play an integral role in the operations of this new digital world.