Metaverse and Operation - Life Insurance

Insight

Aug 29, 2022

Insurance
Technology Transformation

The term "metaverse" has been making the rounds. Organizations and individuals are trying to define the "metaverse".
In this Insight, we define the Metaverse as "a world in which people operate in an online virtual space," and discuss the future of insurance operation and the possibilities for the time when the Metaverse becomes commonplace.

* In the previously published Insight articles, , "Metaverse and Sales Activities - Life Insurance" and "Metaverse, Services and Products - Life Insurance," we discussed insurance sales, products, and services in the future when metaverse becomes commonplace. Please take a look at these articles as well.

Contents

1. Seamless world
2. Challenges of Insurance Operation
3. Insurance Operation of the Future

1. Seamless world

Mr. C, an eSoccer player, puts on a headset. Then, he walks into a virtual hospital in the metaverse space to receive online medical care.

Doctor- How are you doing?

Player C- I'm much better now, thanks to you.

Doctor- You're certainly looking much better. You should take some medication for few more days. I will prescribe some medicine for you.

Player C- Thank you very much.
Mr. C logged out of the metaverse. The next day, he picked up his medication at home and looked at the transaction history of his wallet on the metaverse.

Player C- I see. The insurance covered the medical fees for the last time I went to the metaverse hospital. I wasn't aware of it. It always settled automatically. But come to think of it, what did my insurance policy cover?
Player C put on the headset and headed to the metaverse sales department of the insurance company.

Player C- 「Hi, could I ask someone about my insurance policy?」

Service Rep E- Yes, of course. What would you like to know?
Mr. E speaks English, while Mr. C speaks Japanese. However, they can communicate in their native language, thanks to the simultaneous interpretation function of the metaverse sales department.

Player C- It's not a big deal. I saw the benefits automatically covering my medical fees, and wondered what my policy actually covers and how long it is valid for.

Service Rep E- For example, your insurance policy covered the medical fee for hospital visit the last time you went to the hospital to treat the illness that caused your recent hospitalization. The policy term is until August 20XX, and you can check your policy details from Mr. C's wallet this way.
Showing a display, Mr. E explained how to inquire about the policy details from the wallet.

Player C- I see. Thank you.

Service Rep E- No problem! By the way, though it’s unrelated to your insurance policy, I need to tell you something. I'm a big fan of your team!

2. Challenges of Insurance Operation

This story is entirely fantasy. However, the insurance and healthcare industries will need to be prepared to transform to realize this fantasy. Such a future may come in the next decade or two. There are three challenges insurance operation need to overcome to be a front runner of the transformation. The three key points are as follows, each of which is to discuss in detail (Figure 1).

Maintaining data quality
Standardization
Service level improvement

1. Maintaining data quality
The insurance industry has tried to reduce the steps in the operation such as data reentry or processing to avoid jeopardizing data quality. For example, a shift to paperless is one way to reduce such risk, and the paperless system in the new business acquisition area has made considerable progress. Even in the policy maintenance area, it is possible to inquire about policy details and perform transfer procedures via the Web and smartphones. For example, policy holder can take photo of medical fee bills and sent it using smartphones in the claims payment area.

In the above fantasy, the level of data linkage is even higher: from the time the policyholder visits a medical institution until the benefits are paid, no data entry or processing occurs for either the policyholder or the insurance company. The assumption here is such that all data necessary for the operation is automatically sent to the insurance company, without the policyholder having to enter information on their smartphone or take photo to send the required documents. In reality, achieving this level of data linkage is nearly impossible under current environment, as it is challenging to eliminate all paper documents and data that need additional manual input.

2. Standardization
Standardization is also an essential theme in insurance operation. For example, suppose business operations' inputs, processes, and outputs are standardized. In that case, there will be more room for batch processing using a system, allowing for more efficient administrative processing, regardless of the type of product or procedure.

However, the hurdle to standardization is high for operations involving multiple companies and organizations. For example, the collaboration with medical institutions discussed in the story above is an industrywide transformational idea that has probably thought about at least once. Still, in reality, this view is quite challenging to realize. For example, each insurance company and each medical institution has their own format and operations for claim and medical certificates. Standardizing them would require leadership that transcends companies and organizations. In addition, the reality is that insurance companies incur certain costs to check for omissions and errors that may arise from the involvement of various entities and passing through non-unified formats and processes.

3. Service Level Improvement
One of the trends among insurance companies is the idea that insurance operation, which is often viewed as a cost center, can be a source of customer satisfaction and an opportunity to create new customer contact points.

Currently, the sales and administrative functions of insurance companies are separated. Salespersons are primarily responsible for contacting customers, understanding their needs, making proposals, and closing. At the same time, administrative persons handle the process after the closing.
However, life insurance has limited point of contacts with customers after policy has been signed, and there are few opportunities for customers to perceive the attractiveness of products and services. Therefore, there is a movement to increase customer engagement by being aware of service levels even in events that do not occur frequently, such as maintenance and claims payment procedures.
In the fantasy above, a service representative with the same interest, "soccer" is automatically assigned to a customer through a routing function based on preference, and a simultaneous interpretation function is set up so that a service representative can immediately respond to a customer whose native language is different from their own. This represents the ideal of customer service, providing the best response in real time based not only on the attributes of the customer, but also on their interests and preferences.

Figure 1: Insurance Operation Challenges

3. Insurance Operation of the Future

The challenges of the insurance operation seem to have nothing to do with the metaverse. However, features of the metaverse may become factors to solve those challenges. Of course, at this point, the average consumer may not be ready to be exposed to the metaverse daily, and it is difficult to imagine that the metaverse is an immediate and drastic solution to the challenges of insurance operation.
On the other hand, we can foresee the future of insurance operation from this imaginary story. The three key points are as follows, each of which is explained in detail (Figure 2).

Minimization of data entry
Automation of operations
Increased value of social skills

1. Minimization of data entry
Because the metaverse is a digital space, data acquisition and accumulation are easier compared to the real world.

In the fantasy above, data required for benefit claims are automatically collected from the data stored in the metaverse and linked to the insurance company. If such a system were to be implemented, policyholders would no longer need to enter data or send images during the claims application. They would not notice that the process is being carried out. The insurance company would not have to supplement the data by manual entry or AI-OCR, and the process automatically begins with the necessary data set. Furthermore, policyholders' statements and actions in the metaverse may be automatically converted and stored as data and linked to the insurance company as necessary information for the claims process.
Although customer consent will be required to provide data, the Web 3.0 concept of sharing data among users may make it difficult for data to be duplicated.

2. Automation of Operations
One of the technologies supporting the Web 3.0 worldview is smart contracts. Smart contracts are a mechanism for automatically executing contracts using blockchain. For example, in the fantasy above, the process from the occurrence of the event for one claim payment to another is set to be performed automatically using smart contracts.

For the process to be executed automatically, standardization of formats and process is necessary, but as noted in "2. Standardization" in "2. Challenges of Insurance Operation since the virtual space is uncharted territory, it is possible to create standardized administrative process from the beginning without being aware of existing mechanisms.
If a mechanism for standardized process is provided in the metaverse and utilized by all companies and organizations, operations may naturally become standardized and automated at a higher level.

3. Increased value of social skills
In the digital space, where programs can be easily embedded, the scope of work supported by technology is expected to expand. Once technology take over standardized operations, pure social skills possessed by humans, will become a differentiating factor in creating a better customer experience.

In the fantasy above, technology supports communication between policyholder and operator who speak different native languages. Pure insurance knowledge, explanatory skills, and responsiveness will be the source of value-added operations. In the future, there may be no boundary between sales and administrative work, as administrative staff, like sales staff, will be able to grasp the needs of the customer demands and make proposals.

Figure 2: Metaverse Features and Insurance Operation of the Future

This Insight article is the last in this series discussing "Metaverse and Life Insurance." However, we believe there is still much to be concerned about what kind of value and change can be created in the metaverse, as it is attracting attention and expectation in the industry.
We, ABeam Consulting, have established a team to respond to inquiries regarding the metaverse. In addition, we have begun discussions with business companies and consortiums in the hope of appropriately understanding this trend and utilizing it to bring about meaningful social change. We would like to further deepen our discussions with companies and organizations to co-create valuable businesses in the future.

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