Experts say the metaverse is still very much in its infancy, but heavy investments multiplied by the speed of computing equals a horizon that is rapidly approaching. We may not know exactly what the complete metaverse will look like, but we know it’s coming.

Already people are buying houses in virtual neighborhoods. A year ago, you could buy the smallest unit of digital land in Decentraland for under $1,000. Today that same unit of land is $13,000. Prices are climbing, and the metaverse real estate market is expected to grow 31% in the next six years.

But once the metaverse loses that “new metaverse smell,” we will have to come to terms with the fact that the property we own, the health of our avatars, and the data that makes everything possible will have to be protected. Our metaverse lives and goods will have value, and where there is value there is risk.

What will we need to insure in the metaverse?

In their January 2022 report, “The Metaverse & Insurance: Pixel Perfect?,” Michael Mainelli and Simon Mills explain, “risk management in the metaverse is no different than risk management in the real world. Traditional insurance approaches still apply. There will be a need for developing specific insurance products for metaverse applications, such as the protection of personal data and digital assets or insuring against long-term physical or mental harm.”

In his Celent article, “Insuring the Metaverse: A Thought Experiment,” Donald Light proposes several categories of insurance we will possibly need if we are going to explore or reside in the metaverse. These include protection for virtual property, businesses, health, and even lives.

Personal data

Every person in the metaverse exists as data and this presents an enormous opportunity for this data to be stolen. Metaverse residents will need to protect their data with insurance products that resemble today’s cybersecurity policies. The difference will be the type of data the insurance is protecting. Likely, virtual policies will have to protect the data that makes a digital person, not just the data that surrounds them.

Digital assets

Metaverse residents will own property: personal, business, and commercial. Their virtual property’s exposure to risk is no different from the risk that comes from owning property in the real world. The potential for loss exists on both sides of the computer.

According to MetaMetriks, a metaverse land analytics provider, virtual real estate will grow to over $1.9 billion in sales in 2022. These dollars do not account for the digital property people are already purchasing and selling in the digital world. These assets may not be analog, but they still have value and will need to have strong insurance protection.

Physical and mental harm

The harm that might come to an avatar is not fully understood, but the risk of suffering some kind of “data injury” does exist. As people invest more time and money into creating their avatars, they will need to have access to virtual health insurance to protect their virtual health.

Additionally, traditional health insurance policies may have to realign to cover the real physical and mental injuries that occur from using virtual-reality computers and components and from sitting in a fixed position for extended periods. We know the health risks associated with prolonged periods of immobility, but, as more people enter and stay in the metaverse, musculoskeletal and cardiovascular complications will likely become greater health issues. Additionally, loneliness and isolation will cause more mental health issues.

A new frontier for risk control and mitigation

Because the risks of operating in the metaverse are still mostly unknown or undiscovered, the insurance industry will benefit from developing ways to help virtual residents avoid risk in the first place. Rather than offering compensation for loss, insurers will benefit from designing coverage that incentivizes metaverse residents to mitigate risks. These services will be more like those offered by Norton or McAfee.

Understanding what the metaverse will become, and the risks associated with operating within, is a bit like building the plane as you’re flying it. It is important, though, for metaverse residents to understand the risks associated with residing in a virtual world. It is equally important for carriers and MGAs to develop protections for residents’ assets and health.

If you’re ready for forward-looking solutions with proven results, see how Vertafore can help.