Metaverse impact on life insurance

As the life insurance industry continues its digital transformation, a new and potentially more disruptive technology is on the horizon—the metaverse.

According to the Accenture Business Trends Survey conducted in April – May 2022, respondents in companies having some form of a strategy around the metaverse believe that in the next three years, a 4.2% share of their revenues will come from new products, services or business models related to the metaverse. This represents a value of $1 trillion globally.

What do we mean by “metaverse?”

For some, the term “metaverse” conjures up images of headsets and avatars roaming about a virtual universe. Accenture sees the metaverse as a continuum of converging technologies such as: artificial intelligence (AI), augmented and virtual reality (AR/VR), blockchain, digital twins, edge technologies, cloud, digital currencies, non-fungible tokens (NFTs), social platforms, ecommerce, and digital marketplaces. And it is changing the way people and organizations interact. What it means for life insurers depends on the combination of technologies and how they can be used to add value for our customers, employees and stakeholders.

For life insurers, these technologies will affect how we protect and underwrite risk. Look for a new generation of insurance technologies—“insurtech 2.0”—that will leverage these new and emerging technologies to not only improve risk assessment, but also to simplify life insurance processes across the value chain. So instead of focusing on front- or back-office efficiencies alone, which can provide incremental improvements, insurers can apply these technologies using a holistic digital strategy that can supply expanded, 360-degree value.

?Accelerating digital life insurance

It’s encouraging to see that more insurers are updating their core insurance processing systems to accelerate digital transformation, a move that could position them for success in the metaverse. They’re extending the value of these systems using APIs—often pre-integrated with the core system of record—to quickly enable added front- and back-office capabilities from third-party providers. Typically, automation is layered in to further accelerate digital processes like underwriting and claims.

As metaverse technologies mature, insurers will have even greater potential to interact with customers and employees in improved and differentiated ways. Imagine a metaverse-inspired buying experience that combines the physical world of an insurance agency with a virtual world to help consumers digitally obtain and service a policy. This is welcome news for consumers who, at the very least, expect agents to know who they are and their purchase history; and expect a faster response to their changing needs.

Simplifying the life insurance experience

Customer experience is among the top three technology investments insurers are making in 2023. According to a *Gartner? report (Kimberly Harris-Ferrante, December 2022), “Improving the customer experience (CX) was ranked higher than more strategic focuses such as growing revenue or the development of new products/services to support transformation.”

While some insurers expect a tougher economic climate ahead, they realize that technology investment can strengthen profitability while also adding long-term strategic value. Personalization, faster policy issuance, and connectivity with third-party platforms in CRM and health and wellness are just a few ways insurers can apply technology to simplify the customer experience. For example, unlocking siloed data from legacy systems enables insurers to glean more value from the data they already have. Moreover, creating interoperability across customer-facing functions helps simplify sales and servicing, adding more convenience for employees and consumers alike. And insurance consumers in particular place convenience at number one in what matters most according to Accenture Research. So where should insurers invest?

Developing use cases for the “life insurance metaverse”

Technology investment is critical to competing for—and keeping—future life insurance customers in a world that will become increasingly reliant on metaverse technologies. However, such investments require use cases that will generate the most returns. In the chart above, you’ll find the results when Accenture asked insurance CxOs which metaverse technologies they were most interested in exploring. It’s not surprising to find most use cases were in consumer services and product experiences. This continues to be a focus area for insurers, especially as nimbler insurtechs offer the digital buying experience consumers have come to expect.

The category “Digital assets economies” such as non-fungible tokens was not far behind customer experience as a technology of interest to CxOs. This makes sense in a blended digital-physical world where tokens will become more than just a digital wallet. Consider the potential to tokenize insurance policies along with other important life documents such as wills and trusts, making them portable yet accessible in digital or physical worlds.

Yes, the word “metaverse” is broadly used, perhaps even overused. However, when you consider the technologies underpinning the metaverse, you quickly begin to see its potential to disrupt and to accelerate innovation in our industry. And, if you’re like many of the CxOs we surveyed who believe the metaverse will have a key role in their organizations’ future growth, it’s time to consider your company’s use cases. Accenture can help. Let’s have a conversation.

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