Through the metaverse, insurers can improve transparency, communication, and security, thereby fostering a trustworthy and reliable image in the eyes of their customers.
There still exists widespread sentiment among consumers that insurance companies only act in their own self-interest, which contributes to the pervasive lack of loyalty and trust toward insurers. This can also be attributed to insurance companies’ readiness to take customers’ money and a reluctance to pay it out.
To restore trust, insurance companies need to improve their reputation and be more transparent with their customers about the terms and conditions of their policies. Immersive experiences can provide a solution to this.
An increased cost of claims stemming from Covid-19
The aftermath of the pandemic saw an increase in business disruption-related legal claims against insurers which claim that insurers’ policies did not cover pandemic losses. Judgments on these cases have been mixed and have further damaged the customer-insurer relationship, bringing into question insurers’ financial viability.
In January 2021, the Supreme Court in the UK unanimously dismissed appeals brought by some of the largest insurers in favour of policyholders in a landmark decision. The court approved the FCA’s appeal on behalf of policyholders, which stipulates that the insurer shall provide claims for business interruption losses during the pandemic. Refusal to pay out Covid-related losses certainly added to the strain on the customer-insurer relationship and further contributed to the lack of trust policyholders have in insurers’ commitment to fulfilling their obligations. Customers buy insurance with the expectation that the insurer will provide coverage and financial support in times of need. Being let down in the worst of times can lead to customer churn.
Using the metaverse to encourage customer engagement
To improve their reputation and become more transparent with their customers, insurance companies need to ensure that they are appearing in the same spaces as their consumers. Increasing customer engagement is key.
Greater transparency around the information, policies, and terms and conditions of insurance products and coverage will reduce customer worries about insurers taking advantage of them. Improving interactive communication using avatars to facilitate real-time conversations will allow insurers to address customer inquiries and provide personalized assistance.
Also, using customer data in the metaverse, such as an avatar’s purchase and activity history, to deliver targeted advertising and personalized product recommendations will also ensure customers are receiving insurance offers that align with their specific needs.
Finally, engaging in advertising within the metaverse could prove to be a successful strategy for connecting with younger demographics, as many of them are attracted to the gamified elements found in metaverse platforms. Developing customer loyalty through engagement tactics will make it more unlikely for customers to leave or switch insurers.