Augmented Reality (AR) & Virtual Reality (VR) in insurance: New frontiers of customer engagement

It’s a Saturday afternoon as you enter a house. Before you, a toaster spits sparks, an aquarium teeters on the brink of bursting, and the bathroom floor is flooded with water. But none of this is happening. Armed with your smartphone and Allianz’s augmented reality app “Haunted House,” you’re experiencing everyday scenarios transformed into vivid lessons on potential home hazards. This isn’t just a quirky display of futuristic technology; it’s a strategic initiative by this UK-based insurer to boost homeowner awareness and preparedness for the unexpected.

Similarly, Australian-based NRMA Insurance leverages virtual reality to deliver stark lessons in road safety. Their VR car crash simulation places participants inside a real car, enhanced with a hydraulic system that moves in sync with the harrowing scenes played out through their VR headsets. This visceral experience aims to instill a deeper understanding of crash dynamics and the importance of cautious driving.

Of course, these are rather dramatic examples of how insurers can leverage AR and VR to engage with their customers—how many people want to willingly experience a car crash, simulated or not? Still, many other use cases exist for these technologies in the insurance industry, from risk assessment and damage estimation to training adjusters and enhancing customer service interactions.

What exactly are AR and VR?

Both Augmented Reality (AR) and Virtual Reality (VR) are immersive technologies that enhance and alter our perception of the world. AR layers digital information onto the real world. Heard of Pokémon Go? That’s AR. In contrast, VR creates a fully immersive experience, typically through headsets, transporting users to entirely virtual environments, commonly used in gaming. Increasingly, businesses across various sectors are adopting these technologies to train employees, improve customer experience, and streamline operations. And the insurance sector is no exception here.

AR and VR use cases in the insurance sector

AR-powered visual claims

A recent report predicts that by 2025, over 80% of auto claims and 50% of non-injury claims will be processed virtually. A big part of this shift is AR-powered visual claims. In the past, adjusters would often have to assess damage in person or rely on less-than-ideal images from customers. But today, policyholders can initiate live video sessions, using their smartphones to show adjusters the damage in real time.

Adjusters use AR technology to overlay measurements directly onto the video feed, precisely gauging the extent of damage without physical presence. They can also pinpoint the damage location using geolocation, pause the feed to examine details more thoroughly, and instantly share claim forms and documents for electronic signatures. This method not only reduces the need for onsite visits but also accelerates the entire claims process.

AR for field risk assessments

Zurich Insurance has changed the way its risk engineers and field inspectors conduct on-site evaluations through AR glasses. These professionals often work in challenging environments where they need to climb ladders or navigate tight spaces, making it cumbersome to handle traditional handheld devices for accessing vital data like checklists or site plans. By using AR glasses, Zurich’s engineers and inspectors can view multiple screens of information directly in their line of sight. This hands-free technology allows them to consult in real-time with remote experts using “see-what-I-see” communication capabilities, enhancing decision-making and efficiency directly from the field.

AR and VR for training

VR and AR are making training more interactive and human centered. With VR, new adjusters can step into realistic simulations, practicing on virtual properties to hone their skills safely and confidently. For example, an auto insurance adjuster might use VR to step into a virtual accident scene. They could examine a digitally reconstructed car crash, assess the extent of damage from multiple angles, and practice writing accurate estimates based on their observations. Similarly, a property insurance adjuster might engage in a VR simulation of a flooded home. They would navigate through the house to identify water damage, measure the level of moisture in walls using virtual tools, and simulate interactions with homeowners.

And then there’s AR, which brings training into the real world, allowing trainees to see data and damage assessments superimposed right before their eyes on actual sites. A good example of this is an AR training program by Farmers Insurance. Before the AR/VR program, new hires would walk through a two-story house in L.A. that had significant damages. The problem was that the house was set up in the same way every time, meaning the new employees weren’t getting enough exposure to different scenarios. But with the new AR/VR headsets, they could walk through six different floor plans, seeing a whopping 500 different damage scenarios.

Customer service

Here, AR and VR are mostly used to boost personalized experiences and foster a deeper connection with customers. It should come as no surprise that the insurance industry in general has a reputation for being a little dry or dull. This is mostly out of necessity – insurers must convey information accurately, and they’re typically dealing with sensitive topics.

However, that doesn’t mean there isn’t a place for more immersive technologies that can lighten things up a little. Potential use cases here include AR or VR customer service agents who can answer basic customer questions, troubleshoot issues, or even schedule appointments with human representatives. This can provide 24/7 support and reduce wait times for customers. Another good example is personalized advice on how to make homes safer using an AR app that offers recommendations as you move through your home.

Lastly, insurers could use AR and VR to make choosing or deciphering insurance policies less confusing and stressful. For example, an AR app could scan physical policy documents and then overlay interactive explanations on top of complex terms and clauses, making them easier to understand in the context of the policy.

Final thoughts

Augmented Reality (AR) and Virtual Reality (VR) are redefining engagement across the insurance sector. From immersive training simulations that prepare adjusters for real-world scenarios to interactive apps that educate homeowners about potential risks, these technologies are enhancing both customer service and operational efficiency. As the industry embraces these tools, AR and VR are not just transforming interactions but are also improving the accuracy and empathy of services provided, ensuring a more informed and responsive insurance landscape.

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