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Coming Soon to the Insurance Industry: Virtual Reality

Virtual reality is “the next major computing and communication platform,” according to Mark Zuckerberg, CEO of Facebook. Why should your agency care?
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Why should your agency care about virtual reality? Because it’s “the next major computing and communication platform,” according to Mark Zuckerberg, CEO of Facebook.

“Virtual reality” is the umbrella term for all immersive experiences. Also known as immersive multimedia or computer-simulated reality, this technology replicates an environment that simulates a physical presence in places in the real world or an imagined world, as with gaming and training simulations. In virtual reality, users can interact with their virtual world.

Augmented reality is an overlay of content onto the real world, where that content is not anchored to or part of the real world, as with Pokemon Go and house-hunting apps. In augmented reality, the real-world content and the computer-generated content are not able to respond to each other.

Mixed reality, sometimes referred to as hybrid reality, is the merging of real and virtual worlds to produce new environments and visualizations where physical and digital objects coexist and interact in real time. The most common applications of mixed reality are education and training for pilots and astronauts.

As virtual reality becomes the laboratory of the future, it has broad implications for advertising, retail, visual design, gaming and prototyping. In education in particular, e-learning through an immersive virtual reality experience has the potential to engage users with their material more effectively. Ultimately, virtual reality may even reduce the need for classrooms, lowering tuition costs at all levels of education.

Across industries, virtual reality is likely to improve customer experience while significantly reducing design and development windows. Growth in the virtual reality userbase will create significant consumer demand for haptics and touch transmission devices, in turn increasing jobs in the design and manufacturing sectors. In other industries, however, virtual reality will reduce employment opportunities by improving operational efficiencies.

Augmented reality in particular has many implications for the insurance industry:

  • Potential positive impacts
    • Marketing opportunities via more engaging methods for showcasing exposures and products
    • New categories of exposure—and new niche markets as a result
    • Enhanced claims processing through loss site recreation
    • Education and training opportunities for both consumers and employees
    • Loss control and cost containment for exposures such as workers compensation
  • Potential negative impacts
    • Increased claims, particularly in the areas of privacy and security
    • Greater cybersecurity exposure
    • Increased costs for smaller carriers trying to compete with larger carriers that find it more feasible to adopt virtual reality
    • Health concerns, including motion sickness, cybersickness, simulation sickness
    • Overreliance on data
    • Lag time for laws and regulations

At its best, virtual reality shouldn’t replace real life—just modify it, giving us access to what’s out of reach physically or economically. It’s too early to fully predict all the implications of virtual reality, but the ACT Changing Nature of Risk work group will continue to focus on this primary trend in the years ahead.

Cindy Donaldson is CEO of Red Barn Consulting. Rick Morgan is co-chair of ACT’s Strategic Future Issues Work Group and senior vice president of marketing at WAHVE. Ron Berg is executive director of ACT. Steve Anderson is president of The Anderson Network, Inc., which helps agents and brokers maximize productivity and profits using practical technology.

This article is adapted from the Agents Council for Technology’s risk advisory on virtual realityView the entire Changing Nature of Risk advisory series online.