Augmented and Virtual Reality (AR and VR) technologies are creating a new dimension of risk and insurers should do more to keep up with these developments and seize opportunities, according to a new report out today.
AR and VR technologies are anticipated to generate potential losses to the value of US$20 billion by 2020. Consumers will increasingly suffer accidents whilst playing AR games and companies will increasingly become responsible for securely storing ever more sensitive information, such as location data. As the technologies evolve companies using them will need insurance for personal accidents, business reputation damage or enhanced data security cover. Whilst insurers are unlikely to cover the entirety of this US$20bn risk, there is a huge new market at stake.
Paul Merrey, KPMG Global Strategy Group Insurance Partner, comments: “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 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. Imagine a world where an oil rig risk assessment could be done through virtual reality goggles with an oil rig worker on the ground and the insurer at his desk in London.
“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.”
See the report here.
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KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 12,000 partners and staff. The UK firm recorded a revenue of £1.96 billion in the year ended September 2015. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 174,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.