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Potential Insurance Implications of Virtual Reality

Post written by: Matthew Wachter

virtual reality

noun: an artificial world that consists of images and sounds created by a computer and that is affected by the actions of a person who is experiencing it – Merriam-Webster’s Dictionary 

Imagine being able to send an underwriter to every property location you want to insure. Consider the possibility of a risk control representative being able to examine the electrical wiring of a building that is already constructed. Think about the likelihood of an insured individual being able to demonstrate safe and effective driving before an auto policy is written.

Now, imagine if all of these things could be accomplished with no travel cost, little training and no increase to staffing. Are these hypothetical scenarios merely the collective dream of every insurance executive nationwide? What if I told you that this technology already exists, and could become a part of everyday personal and business activities in the very near future.

On August 1, 2012 a small, start-up company named Oculus VR began a crowd funding campaign on the website, seeking $250,000. The initial funds were intended to help fabricate “developer kits” for their newly dubbed Oculus Rift VR Headset out of existing hardware technology (cell phone displays, processors, etc.) that would enable software companies or amateur VR enthusiasts to create software using Oculus’s new groundbreaking design. The Kickstarter campaign was an unqualified success raising almost $2.5 million dollars.

While initially designed and intended for video game software, once the public began to experience the Oculus Rift, software engineers and investors began to imagine the infinite possibilities. Unexpected uses began to spring-up organically and investment funds began to pour in.  Here are a few examples of current uses of the Oculus Rift and competing technology:

In summation, the Oculus Rift and Virtual Reality technology is capable of drastically impacting a myriad of business sectors, including the Insurance industry. While Virtual Realty has been attempted before with little success, technology and manufacturing techniques have finally caught up to the point that the dream may be on the verge of becoming a (virtual) reality.

Just how viable is this possibility? On March 25, 2014, Facebook announced an agreement to buy Oculus VR for $400 million in cash, $1.6 billion in Facebook stock, and an additional $300 million subject to Oculus VR’s meeting certain financial targets in a transaction expected to close in the second quarter of 2014.[5]

Note: A consumer version of the Oculus Rift is expected to hit the market in late 2014 / early 2015. Competing products from electornics industy giants like Sony are also already in development.

Image credit: Flickr via BagoGames

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