This piece is by Truong Hoang Phuc, FPT Software Managing Director of Global Insurance & Finance, FPT Corporation
Once associated primarily with gaming and entertainment, Extended Reality (XR) is now making inroads into one of the most risk-averse industries: insurance. By combining Virtual Reality (VR) and Augmented Reality (AR), XR offers more than novelty; it opens the door to immersive risk modelling, virtual customer service environments, interactive training, and enhanced security protocols.
A recent PwC report estimates that VR and AR could contribute up to $1.5 trillion to the global economy by 2030, a clear sign that these technologies are becoming commercially vital, building intelligent, experience-led ecosystems that respond to evolving customer expectations and operational complexity.
In the UK specifically, PwC research has also revealed professional services ranks as a top 3 industry leading the adoption of XR, at 10.65%, after engineering and manufacturing (24.13%), and retail and consumer (10.90%).
As the insurance industry shifts towards digital-first engagement, XR is emerging as a practical, transformative tool. It helps insurers stand out in the increasingly competitive markets, deliver more personalised services, and simplify complex processes through visual clarity and spatial context.
How XR technologies are advancing the insurance market
The UK insurance sector is being rapidly reshaped by new proven technologies, with XR technologies a driving force in elevating insurance practices. These include transforming risk assessment and fraud detection, enhancing customer engagement, and streamlining operations. In fact, a survey by Accenture has revealed that an overwhelming majority (91 per cent) of financial services executives, including those in insurance, consider XR technologies crucial for their future operations.
In particular, it’s a game changer for offering highly personalised and immersive customer experience in comparison with the slow, paper-based and fragmented pre-digital processes. In terms of the potential for AR and VR to drive insurers’ marketing campaigns and sales pitches, over 85% of top managers in the insurance industry admit that VR and AR systems are crucial for reducing physical distance with customers and employees.
By delivering a more engaging customer experience that can educate claimants on the claims process and how to share evidence, XR technology takes customers into a highly efficient and immersive realm of insurance. For instance, an insurer can design a virtual environment to illustrate how an insurance policy might shield against financial loss in the event of a car accident. Developing immersive experiences, such as virtual branches and interactive product presentations, can enhance customer interactions and service delivery.
From Training to Claims: How Insurers are Applying XR
There are many use cases for XR technologies in the insurance sector today. Training and development are among the most prominent. With immersive 3D visualisations, predictive analytics, and simulated scenarios, insurers can better equip professionals to assess risk and handle complex claims. These tools also support the development of soft skills, with simulated customer interactions used to improve service delivery. A study by PwC found that 40% of VR learners saw an increase in confidence around the subject compared with classroom learners.
On the customer experience front, XR is enabling virtual customer service centres that combine 3D avatars, product visualisations, and real-time support. Features such as multilingual assistance and AI-driven guidance help remove traditional barriers to engagement, creating a seamless and inclusive experience across different demographics. Insurers can also deploy XR to deliver interactive educational content that helps customers better understand their policies and the insurance process.
Improving Security and Fraud Prevention
Given the sensitivity of customer data, insurance companies are frequent targets for cybercrime. XR introduces new capabilities to reinforce defences. It can be used to simulate potential security breaches and train employees, and in some instances, customers, to recognise and respond to them. This could improve the overall security and reliability of the financial system and reduce the risk of fraud.
Through the integration of biometric authentication and spatial data visualisation, XR can elevate security posture by mitigating the risk of fraud. For instance, facial recognition in AR applications can verify identities, and AR-enabled fraud detection systems can highlight irregular patterns in real time, alerting security teams before breaches occur. XR can also improve compliance auditing with virtual walkthroughs of sensitive facilities or processes.
Complementary Tech Accelerating the Rise of XR
Several supporting technologies are making XR adoption more accessible for insurers. End-to-end encryption can enable the secure transfer of sensitive insurance data, such as quotes, evidence, and claim documentation, within XR environments. Furthermore, advanced cryptographic techniques like quantum-safe encryption are being developed to future-proof security measures against evolving threats.
Meanwhile, virtual assistants and chatbots bring human-like interaction into XR environments, supporting users as they navigate policies, file claims, or request assistance.
Natural language processing (NLP) adds another layer of intelligence, allowing bots to respond across multiple languages and assist customers with different accessibility needs. Voice-enabled commands and sentiment analysis help insurers interpret user feedback and adjust service delivery in real time. For instance, sentiment analysis can indicate where customers express delight, satisfaction, or frustration to guide subsequent service improvements.
Cloud platforms like Microsoft Mesh enable scalable and remote XR experiences, facilitating remote collaboration and data sharing. Cloud-based XR eliminates the need for expensive local compute capacity, making technology accessible across geographies.
Considerations for Insurers Entering the Metaverse
While it’s exciting to consider the potential for XR technologies, insurance leaders must be mindful of some considerations to implement metaverse strategies effectively and responsibly.
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Risk-management strategy: As the potential for fraud and other risks changes in the metaverse, insurance companies must develop new risk management strategies to protect their customers and their assets in the metaverse.
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Staff re-deployment: Whilst chatbots, AI, and robotic process automation (RPA) can replace some mundane jobs in the insurance sector, managers should look to retain staff through training and upskilling for the more exciting and rewarding jobs being created.
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Customer education: Customers who are unfamiliar with this new virtual world of insurance must be eased into it gradually – from gamification and augmented data visualisation to handling virtual assistants or administrating their policies online. Educating customers in this way is vital to build long-term trust and loyalty.
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Managing metaverse environments: Due to the abundance of metaverse environments, open interoperability standards with management tools such as those for resource allocation may be needed to prevent bottlenecks occurring in such compute-intensive environments.
Undoubtedly XR offers huge advantages for the insurance industry, to complement the gains realised by AI, ML, Blockchain, and other well-known technology-enabled trends. Through exploring the possible use cases within their businesses, business leaders will find ways to empower customers, employees and stay current in the rapidly-evolving digital insurance realm.
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