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Insurance presence in virtual worlds is a logical extension of gamification

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If gamification can help life and health insurers engage this generation of coverholders, Alex King considers how digital worlds could lock in the next

They say anyone can sell an umbrella in a rainstorm. So it was that, during a deadly, once-in-a-century pandemic, life and health (L&H) insurance providers began reporting double-digit increases in policy purchases, with an 18.5 per cent spike in the US in March 2020.

If you want truly stunning sales figures, though, consider this: during the pandemic period, Corona beer saw consumption soar by 40 per cent in the UK, and by 20 per cent globally. L&H insurers might question why a brand whose name – given the circumstances – might have put punters off, in fact out-classed sales of financial protection for life, health and wealth.

The answer, perhaps, lies in consumers’ disengagement from what were once considered essential policies. According to research from global financial services organisation LIMRA, the percentage of American adults with a life insurance policy dropped from 63 per cent in 2010 to just over half in 2020. A recent Deloitte survey found that only 20 per cent of those who’d never had mortality coverage were interested in buying it. According to Swiss Re, the global mortality protection gap now sits at $114trillion. Taken together, those stats add up to a gigantic opportunity as well as a reflection of just how slowly the insurance industry has adapted to the demands of modern consumers. But there are promising – even exciting – signs of movement from this famously risk-averse industry.

As David Priestly, who became chief digital officer at Vitality, the innovative digital health insurance in 2017, recently explained: “If you just concentrate on trying to deliver value for your customers and creating an exceptional experience, more often than not, you’re going to do the right thing.” Which means touchpoints are now seen as a priority.

Millennials spend an average of six hours per day on their phones, across an average of 80 apps, yet their insurance provider ordinarily makes contact just twice a year – once with a renewal email, and once with a receipt. Smartphone absorption is an open goal that L&H insurers have been scuffing the ball wide of for years. Now they’re beginning to hit the net, leaning on gamification as an appealing, youthful way to generate dozens, if not hundreds, of touch points per customer per year.

Vitality was one of the first L&H insurers to gamify health insurance, incentivising policyholders to lead healthier lifestyles with premium reductions and a rewards scheme full of healthy treats.

Several other insurers have since followed its lead, building game-like mechanisms of their own. Sproutt, the Connecticut-based life insurer, opted for a Quality of Life Index to score customers’ ‘hidden health’, as revealed by AI and predictive analytics. Its 15-minute quiz generates a score that is immediately accompanied by bespoke health and wellbeing advice.

The health score generated by Zurich-based Dacadoo’s Wheel of Life, meanwhile, is based on an astonishing 300 million patient hours of data. Dacadoo sells this scoring system to insurers, alongside a digital lifestyle coach and points-based rewards, which can be redeemed in an online store.

Then there’s London-based YuLife, which offers group life insurance to

employers. Overseen by the insurer’s digital mascot, Yugi the giraffe, YuLife users earn YuCoins: one for every mile they walk, or one for every two minutes they spend in mindfulness. Users can progress through Candy Crush-style levels, earning SnapChat-style streaks. Banked YuCoins are exchanged for vouchers to shop at the likes of Amazon, ASOS and Fitbit. The firm even has a chief wellbeing officer, in the form of BBC Breakfast’s Dr. Rangan Chatterjee.

If all that sounds like a Millennial fever dream, you’re beginning to sense the direction of travel for an industry once associated with all things grey, dour-faced and dismal. Through this approach, insurers are building new relationships with their customers – becoming ‘sticky’, even indispensable, and using the resultant increase in user data to generate more accurate, bespoke advice. YuLife’s vibrant offerings are underpinned by a loftier goal. Having found that 65 per cent of employees say they’d do more physical activity if they were rewarded by their employer for doing so, YuLife is among a growing cadre of L&H insurers that believe gamified health objectives could actually make us all better and happier – reducing premiums for consumers and the volume of claims for insurers while benefitting society more broadly.

Whether or not that will turn out to be the case – and some doubt has been cast on these hopes by academic research into the benefits of health wearables – it’s certainly a more engaging value proposition than the ‘have kids; get life insurance’ sell of the past few decades. It’s bringing young customers through the door, touching on areas of their lives that are meaningful and fun.

As YuLife’s chief product and technology officer, Josh Hart, recently told Business Leader: “For years, life insurance had simply been death coverage; we wanted life insurance to focus on life, and harnessing the latest technologies – AI, app development and the metaverse – was inevitably going to be key in realising that goal.”

YuLife’s ‘Yuniverse’, a virtual world of coins, quests and challenges, qualifies as a metaverse in the broadest sense: an immersive digital space in which consumers are expected to spend more and more of their time and money in the coming decades. In the wider constellation of metaverse platforms, opportunity knocks for forward-thinking businesses. Since Facebook ‘went Meta’ in October 2021, active wear brands Adidas, Puma and Under Armour have announced their involvement in what is now being called Web3.0. Ex-footballers David Beckham and John Terry have been dabbling in the digital economy, the former as global ambassador of the DigitalBits blockchain, the latter in an ill-fated launch of a batch of NFTs. Most relevant to L&H insurance providers is the OliveX Fitness Metaverse, a digital health and fitness company that’s taking full advantage of play-to-earn experiences in virtual worlds. In The Sandbox metaverse, the firm is working with a number of fitness brands to create digital clones of their products as NFTs. OliveX has also created a DOSE token, earned through running in the virtual game Dustland Runner, which it claims to be the world’s first blockchain fitness game, rewarding exercise with coveted digital items in a virtual world.

At hubb, we co-work for two hours a day in the metaverse so that, when the metaverse does become a success, guess what? We’re two or three years ahead

Ed Halsey, hubb

All this might sound far-fetched, but it’s not a far cry from what L&H insurers have been building over the past half-decade through progressive gamification. So, might moving into the metaverse be the insurance industry’s next leap forward?

Ed Halsey, COO and co-founder of hubb, the Glasgow-based challenger broker that claims to be the first metaverse-ready insurer, reckons it’s possible.

“There are opportunities there to create new kinds of experiences,” he says. “In insurance, we do a lot of golf days, for instance. So, what if hubb held the first Metaverse Open – everything branded and everything sponsored, and an award ceremony with a speech about hubb and what we do.

“At hubb, we co-work for two hours a day in the metaverse so that, when the metaverse does become a success, guess what, we’re two or three years ahead. Our staff already have familiarity, we have a lot of assets – we’re not playing catch up. Plus, early adoption is cheaper, it’s less saturated, and there’s way more visibility for brands, which is why I think the big brands have doubled down on it.”

It’s not especially common for insurers to be ahead of the curve, but in encouraging healthy lifestyles via gamification in virtual communities, L&H insurers are in on something that the world’s biggest fitness and leisure brands agree could take off.

And what about insurance in the metaverse itself – is it fanciful or inevitable?

Renjit Philip, director of Boxx Insurance, a Canada-headquartered cyber-security and cyber-insurance specialist, has commented: “My take on insurance in the brave new world of Web3 and blockchains is that solutions will have to be developed on chain. ‘Old world’ insurance will need to be supplemented by metaverse versions of reinsurers, brokers and insurance companies that natively exist on chain and will run as DAOs (decentralised autonomous organisations), incentivising their customers and employees with appropriate tokenomics.”

“I’ll bet that, within the next 10 years, somebody, somewhere manages to find a way to get a virus into the metaverse that can be transferred between avatars,” predicts Halsey. “We need certain things to play out so that we understand what the risks will be. But the industry could begin collecting that data now – with small policies for certain digital assets.”

Taking out insurance incase your avatar gets sick sounds absurd – but only as ridiculous as the concept of Bitcoin and Facebook did in the early days. Perhaps, after the intrepid first insurers make their way into the metaverse, the industry will come to realise that there’s a whole other world to tap into, albeit one where the principles of insurance on terra firma still apply. As Halsey says: “Insurance should only ever be used as a tool that protects against those risks that can’t be avoided, and, in theory, risk can be avoided in the metaverse – because it’s designed.”

Doppelgängers may or may not turn out to be invincible, but in this more vulnerable dimension, the real power of the metaverse is in offering insurers a way to up their game and reduce risk by further engaging customers, protecting health and wealth.