Insurance sector not doing enough to keep up

Virtual reality headset 450

Augmented and virtual reality (AR and VR) are set to create a new market for insurers with an estimated $20bn of risk by 2020, according to KPMG.

According to KPMG global strategy group insurance partner Paul Merrey, with the evolution of AR and VR games and environments, both for work and pleasure, the companies using them will potentially need to invest in insurance for personal accidents, business reputation damage, and data security cover.

Merrey said: “There are some obvious risks associated with AR and VR technologies which aren’t currently covered by insurers. Pokémon Go, for example, was a huge success but there were reports of some serious personal accidents, in California two distracted gamers fell around 50ft off a cliff. Whilst some insurers are already looking at this market, there remains work to be done to understand the full extent of the potential risks and applications.”

The consultancy firm highlights, however, that the insurance sector is doing little to keep up with technology and take advantage of this opportunity.

Merrey said: “The uses of augmented and virtual reality are only beginning to be understood. It has potential well beyond gaming - it could actually revolutionise how insurers run their own businesses.”

He added: “At present, only a few insurers are actively following AR and VR developments and considering how to address the changing risk landscape, yet there is a huge potential market at stake. Insurers that fail to keep pace with this technology could miss a significant opportunity.”