Digital Transformation

How augmented and virtual reality are changing the insurance landscape

Augmented reality and virtual reality are expected to become multi-billion-dollar industries very soon. But are insurers ready for the risks and opportunities these exciting technologies will create?

by Louise Portelli (contact)
2 minute read

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Consumer and business markets for augmented and virtual reality (AR and VR) look set to grow dramatically over the next five years. Oculus Rift and HTV Vive for VR gaming are already entering the mainstream. This will pave the way for wider adoption of AR applications, with products such as Microsoft HoloLens and Magic Leap looking set to gain mass-market appeal in the next few years.

These new technologies have the potential to bring about significant changes in the risk landscape. Regulatory measures are likely to emerge to mitigate some of the new risks. But, in other cases, insurance solutions will be required. As a result, growth in AR and VR insurance could mirror the spectacular increase in cyber security insurance, for example, which rose by 27 per cent annually between 2012–2015[1].

The opportunity is significant, but is the insurance industry ready to seize it? The danger is that traditional insurers will wait until they are more familiar with the risks from AR and VR until they make their move. This will leave the door open to bolder players, including AR and VR companies themselves and technology companies. These competitors may be faster to act and seize first-mover advantage in this valuable new market.

This KPMG report, part of a wider series on the future of commercial insurance, explores the issues, examines the threats and clarifies the challenge. It will help you understand:

  • how the market for AR and VR products will develop
  • what new risks will emerge from AR and VR
  • how new players will move to develop insurance solutions and challenge traditional insurers
  • what areas to address to capitalise on the opportunity.

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[1] Growth in Cyber Coverage Expected as Underwriting Evolves, Insurance Journal, 4 April 2016.

 

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