The Metaverse & Insurance: Pixel Perfect?
Friday, 28 January 2022
Z/Yen highlights the opportunities and pitfalls for business and individuals in the metaverse in a new report, “The Metaverse & Insurance: Pixel Perfect?" (Long Finance & Distributed Futures, 59 pages).
The report sets out the challenges and opportunities for people concerned with risk:
- The risks to its users are not fully understood:
- The Metaverse may create new socio-economic and political risks.
- As the Metaverse is likely to be resident in ‘the cloud’, dispute resolution
- will be difficult.
- As a core network technology the Metaverse’s potential may be multiplied by combining with technologies such as machine-learning (AI), quantum computing, malware, or widespread surveillance.
The report recommends that in the light of these developments, insurers might consider the following actions:
- To familiarise themselves with the concept of the Metaverse, visualisation, machine-learning (AI), connectivity, big data, and other 4IR (fourth industrial revolution technologies) as well as some of the current highly active areas such as NFTs or cryptocurrencies.
- To enhance their skills base in the Metaverse’s wide range of requisite expertise by investing in training and recruiting more specialist expertise.
- To explore ways of offering new Metaverse products and services:
- managing the risks associated with an individual’s personal data and a corporate’s Metaverse data;
- managing the risks associated with digital assets, in particular theft, regulation, government policy, and legal jurisdiction risk;
- developing specific insurance products for Metaverse applications, such as the protection of personal data and digital assets, or insuring against long-term physical or mental harm;
- offering risk control and mitigation products, rather than just compensation for loss suffered.
- To consider new funding mechanisms, particularly extensions of crowdfunding. The Metaverse, if it achieves scale, is particularly suited to large numbers of users offering guarantees, for example, an insurance-linked security insuring specific online assets could be tied to users’ guarantees, or gambling markets used to create portfolios for risk management.
Professor Michael Mainelli, Executive Chairman of the Z/Yen Group remarked: “Mark Twain said: ‘buy land, they’re not making it anymore’. The internet created a Dot.com domain land boom. The metaverse land grab is just beginning.”
As well as new opportunities for entertainment, commerce and telepresence, the report looks at the dark side of the metaverse:
“In addition to the theft of personal data, the use of VR and haptic technology could allow platform operators to collect biometric data on users, allowing unscrupulous operators to conduct behavioural tests, refine responses and use the data to nudge real-world policy,” says co-author Simon Mills
Professor Alistair Milne, TECHNGI Principal Investigator commented: “This report was commissioned by us on 13 October 2021, so we clearly weren’t just jumping on a Zuckerberg bandwagon. In fact this report isn’t encouraging anyone to jump on any Metaverse bandwagon that might collapse.”
The full report is available to download here: https://fsclub.zyen.com/documents/2872/The_Metaverse__Insurance_-_Pixel_Perfect_2022.01_v3.2.pdf
A short presentation summarising the report findings can be viewed here:
ENDS
Notes For Editors
TechNGI
TechNGI is a cross-disciplinary research project investigating the opportunities and challenges for the UK insurance industry arising from the application of new AI technologies, including machine learning, distributed ledger, automated processing, and the explosion of available data.
Lead by Loughborough University, it brings multiple academic and industry partners together and is funded as part of the UK’s Next Generation Services Industrial Challenge.
The goal of the programme is to connect academia with industry to maintain the UK Insurance sector’s leading position as the industry undergoes significant transformation. We aspire to resolve potential behavioural and socio-technical barriers in the ongoing adoption of AI technologies.
Z/Yen Group
Z/Yen is the City of London’s leading commercial think-tank, founded to promote societal advance through better finance and technology. Z/Yen ‘asks, solves, and acts’ on strategy, finance, systems, marketing, science, and intelligence projects in a wide variety of fields. Z/Yen manages the Long Finance initiative.
For more information please email Simon Mills at simon_mills@zyen.com.