I recently watched a Netflix documentary about the Fyre Festival. Two things from the story really stuck with me: 1) Festival owner Billy McFarland failed to get festival insurance; and 2) He couldn’t (or wouldn’t) listen to reason, as multiple people told him it would be impossible to pull off such an ambitious festival in under six months. At one point, someone tried to show Billy – using a map spread out on a table – that the island venue could not accommodate the number of festivalgoers and luxury villas that had already sold. While watching, I thought about Virtual Reality, not because it’s my job but because immersive technologies might have prevented the disaster that Fyre Festival turned out to be. What if those around Billy had used VR to snap him out of his delusions? Or what if Billy had tried to get festival insurance? Might an insurance agent have used VR to “preview” the festival and ultimately denied coverage? Perhaps that would have convinced Billy to cancel the event.
The insurance industry is, in fact, exploring virtual as well as augmented reality for a number of applications, including risk assessment, accident recreation, remote claims handling, and customer education. AR/VR may also be a solution to the insurance sector’s labor concerns and the answer to rising customer experience expectations.
State of the Insurance Industry
Insurance companies are not exempt from digital disruption or the need to create a more flexible and even virtual workforce for the digital age. As some manual and traditional industry tasks become automated, insurers will need to both recruit and upgrade their talent at a time when the labor market is incredibly tight. This is especially true for the tech, data science and actuarial labor pool (Deloitte). Furthermore, employees impacted by automation as well as Baby Boomers with irreplaceable institutional knowledge will need to be repurposed, which means retraining and leveraging cutting-edge technology to facilitate remote expert mentoring of new workers.
The traditional insurer-insured relationship can be boiled down to a monthly bill or claims submission when something goes wrong; but today’s insurance customers – many of whom are millennials – want more: More convenience and more personalization in the insurance buying and claims processes. Consumers want more control over their coverage through digital channels; they want insurers to leverage advanced sensors and analytics for tracking trends and results that will lower their payments (as in auto and homeowner’s insurance), and they want more innovative and hybrid types of coverage. These and other new expectations are clashing with the long-established culture of the insurance industry, pressuring companies to look for technology that appeals to a new generation of adults seeking insurance.
Applications for AR/VR in Insurance with Real-life Use Cases
Though the insurance sector is usually slow to adopt new technology, augmented and virtual reality are beginning to show up in the ways insurers market and provide their services. Insurance companies are exploring AR/VR as part of marketing strategies, for educating clients, to estimate damage, for employee training, and more:
Insurance is a large and valuable market; and with new players offering fast, efficient, digital services, it’s also a fiercely competitive one. Traditional insurers are turning to technology – both the enabler and accelerator of digital transformation – to stay relevant to a changing customer base:
Explaining Insurance Plans
AR/VR can make the complex process of buying insurance easier by simulating real-life situations to showcase the value of various life, health and other coverage plans. Far more powerful than a brochure, website or salesperson, immersive simulations can drive home the need to save for retirement, simplify pension planning, etc.
Consumer Education / Risk Mitigation
In a similar vein, AR/VR can be used to warn clients about dangers and help them prevent the need to file a claim. By allowing insurers to demonstrate both common and exceptional risks in a virtual, risk-free environment, immersive simulations can improve the safety practices of different types of policyholders. For instance, doctors could use VR to practice on a new machine before using it with real patients, employees could learn to identify workplace risks, and homeowners could learn to prevent floods and fires.
Insurers are also toying with VR incident management and training programs that would give customers a fairer rate (ex. virtual driving tests for auto insurance). After successfully completing such a program, the customer would send her results to her insurance agent, verifying her enrollment and qualifying her for discounts (reduced premiums).
Marketing and Customer Engagement
With the ubiquity of AR-capable smartphones, companies today are increasingly incorporating AR into their brand apps and other marketing strategies. Insurers are no exception: AR experiences and VR simulations that create awareness about the importance of buying different types of insurance are part of new marketing and customer engagement plans. In general, insurers are looking to attract and retain new and existing customers by providing informational and entertaining content. This represents a significant move away from the usually distant or aloof position of an insurance company vis-à-vis its clients.
One way to improve the customer experience is to increase an organization’s operational efficiency; for instance, faster order picking in a warehouse leads to faster delivery and higher customer satisfaction. Another way is to focus on those times the customer directly interacts with the business. In insurance, these times are when a customer purchases a coverage plan, files a claim, or contacts support.
In addition to helping consumers understand insurance plans, AR/VR can provide real-time guidance to policyholders on how to fill out claim forms, resolve billing issues, and more. Some insurers are experimenting with virtual customer service (like a virtual support center) and enabling policyholders to interact with adjusters and begin documenting damage in real time through AR. Whether it’s through an individual’s mobile camera or, one day, smart glasses, adjusters can be “on the scene” with the policyholder, reviewing the damages, even taking exact measurements; allowing for faster and more accurate documentation of loss and faster case resolution.
Employee-facing or Operational Applications:
The game of insurance is about risk avoidance, the goal being to convert consumers and businesses into policyholders while driving down claims. AR/VR can be an effective tool for reaching these goals, not just through customer education but also by improving employee performance, making insurance workers shrewder and more efficient:
(Ongoing) Risk Assessment
AR/VR open a number of new capabilities for risk assessors to reduce cost and loss ratios. As mentioned above, auto insurers are considering administering virtual driving tests to determine whether someone is a safe driver before insuring them. VR is also being used to model risk: Assessors can navigate a building before it’s built, thereby improving insurance estimates, and better judge the safety of, say, a warehouse by simulating potential accidents within and evaluating the locations of exit doors and stairs. During risk inspections, assessors could use smart glasses to instantly document and record notes hands-free, and to connect with remote experts who might point out weak spots by augmenting the user’s field of view.
The Internet of Things (ex. smart automobiles, smart homes, etc.) is huge for insurance, enabling predictive analysis and preemptive actions that should reduce the number of high-frequency, low-impact claims. This paves the way for innovative insurance models, like plans that trigger based upon forecasts of loss as opposed to an actual event. Insurers might also use the wealth of data from IoT technologies along with statisticians to visualize and analyze complex data sets in a virtual setting.
Most early use cases of immersive tech in insurance come from the property and casualty side of the industry. This is because AR/VR present the ideal tool for safely recreating real-life disasters and estimating repair costs. Through the use of digital building plans and real-time sensor information overlaid on top of a damaged building, AR glasses-wearing agents can carefully review the damage on-site, doing things like seeing behind walls to determine the location of gas lines and other critical or hazardous objects.
Claims adjusters can overlay images of a building’s pre-loss condition for comparison, document damaged areas hands-free (useful for later VR accident simulations) and confer with remote experts. This makes it possible to more precisely estimate damage and process claims quicker, which, of course, pleases customers. AR glasses also allow for remote damage assessments, where an adjuster shares the view of a colleague at the incident site (wearing smart glasses) or looks through the customer’s mobile device to assess the damage without physically being there.
Remote Guidance and Employee Training
Accenture has found that 85% of insurance executives are interested in leveraging AR/VR solutions to bridge the physical and informational distance between newer and experienced employees and between agents and customers. This is especially key in the training of claims processors, who have one of the most important jobs in the industry (investigating claims). As studies show that people learn and retain information better when it’s presented in context over their real-world view, insurance employees should be able to train faster and more effectively “by doing” whether in a virtual environment or via AR-powered remote guidance on the job.
Indeed, leading insurers are finding AR/VR great for training agents at a lower cost, giving them virtual experience that raises their confidence and the accuracy of their work. Immersive training programs can also help insurance agencies prepare employees to work in specific sectors (ex. auto insurance reps learning about engine repair; home insurance reps learning about maintenance lifecycles), so they can make more informed decisions and offer policy-specific recommendations to clients. Remote technical experts might also provide a second pair of eyes, training agents in real time using AR.
Visual Claims and the Claims Process
Alluded to above is the potential for AR/VR to enhance and speed up claims processing by unlocking new methods for evaluating claims and detecting fraud in the field. With AR, multiple agents are no longer required to visit the claim site; just one employee equipped with smart glasses can go, while experts look on, inspecting damages and calculating losses remotely from the office. The time and money saved leads to greater employee efficiency and higher customer satisfaction. Customers themselves can serve in this role using an AR-enabled mobile device or perhaps smart glasses received upon purchasing a policy.
Policyholders are becoming fans of visual insurance claims, which promise more efficient claims processing and quicker payment. AR-powered video solutions can expedite claim settlements by enabling remote inspections at the First Notice of Loss and reducing adjustors’ time in the field (thereby lowering overhead). Customers can show a contact center agent the cause and extent of, say, a car crash, through a live video connection; giving the agent immediate, real-time access to information, including valuable pieces of temporary information like road conditions, vehicle position, skid marks, etc. This significantly shortens the claims process, eliminating not only the usual site visit but also any lengthy back-and-forth communication between agent and customer. The result: More accurate appraisals and faster resolution time.
The transition from old industry methods to new ways of working with augmented reality will produce a more efficient and cost-effective insurance marketplace, transforming the ways agents interact with customers, enforce policies, and assess claims. Moreover, business and personal use of AR/VR technologies will open new categories of risk exposure leading to entirely new types of insurance.