Aon Believes Insurers Could See a $20 Billion Opportunity in the Metaverse

The concept of the “metaverse” is difficult to define and is often seen as a vague idea. According to Wikipedia, the metaverse refers to virtual worlds where users interact through avatars, usually in 3D and with a focus on social and economic connections. While the concept has been around for decades, it remains mysterious to many in the business world, making it challenging to assess in terms of risks, rewards, or insurance.

However, this perception is changing, according to analysis by Aon. The broker estimates a potential gross written premium related to the metaverse to exceed $20 billion by 2030.

Aon has secured $4 billion in Web3-related limits, demonstrating insurer interest in this area. Web3 refers to a new version of the internet that emphasizes personal data ownership, blockchain technology, and cryptocurrencies.

The economic impact of the metaverse in Asia-Pacific alone could reach up to $1.04 trillion by 2031, accounting for 2.3 percent of the overall GDP.

These findings are outlined in a report titled “Evaluating risks for virtual assets in a metaverse environment” by Aon’s Adam Peckman, head of Risk Consulting & Cyber Solutions–Asia Pacific, & global head of Cyber Risk Consulting.

Peckman points out in the report that despite the growth of the metaverse, companies are not prioritizing the risks associated with it, which affects the demand for insurance coverage.

The report also highlights that while physical assets are largely covered by insurance, digital assets are not, representing a significant insurance protection gap for the metaverse.

Peckman believes that insurers can play a positive role in the metaverse industry by encouraging equity investment and enhancing capital efficiency through risk capital deployment. Insurance can bring legitimacy to the industry through better risk management, risk analysis, safeguarding of investments, and alternative risk financing structures.

The report suggests that depending on their role in the metaverse value chain, companies may need a mix of traditional insurance, digital asset insurance, and AI insurance to adequately protect their assets and operations.

Examples of specialized insurance products mentioned in the report include digital asset custody insurance, cryptocrime insurance, Bitcoin mining insurance, smart contract and tokenization insurance, intellectual property insurance, and AI insurance.

The report concludes that despite volatility in the crypto market, the ongoing investment and innovation in the metaverse continue to create opportunities for growth and development.

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