“We want to make abstract insurance products tangible”

Luisa-Marie Schmolke, Innovation Manager at the ERGO Innovation Lab Berlin, gave an interview to the trade journal transfer about how ERGO provides customer advice in virtual reality. Just in time: ERGO's VR Experience was honoured yesterday with the “Vordenker Award” at the SZ conference “The Digital Insurance”.

Ms Schmolke, consumers would probably not immediately think of things like virtual reality when they think of an insurance provider. What does the ERGO Innovation Lab do and what goals are it pursuing?

As ERGO, we want to become the digital leader in the insurance industry by 2025 - both in Germany and in our international core markets. The ERGO Innovation Lab is part of this overarching goal and acts as a digital driver within the company. We take an early look at new technologies and think strategically about how they could be used in the insurance context, especially at ERGO. For example, we create prototypes and minimum viable products and carry out initial tests with the technologies. Once these have proven themselves, we scale the applications and roll them out across the Group.

How can we imagine such tests?

Firstly, we start in the classic way with an ideation, conduct research into various technologies and evaluate what could be exciting for us. This is followed by target group and platform research before moving on to initial drafts and tests. For testing, we develop small apps, initial landing pages or create initial prototypes together with start-ups and agencies, which we continuously optimise and track with relevant KPIs in order to learn from them. The fact that we have many different backgrounds as a team in the Innovation Lab, such as media informatics, media economics or market research, means that we can already cover many things internally. For very specific cases, however, we bring in external support.

One specific case in which ERGO has worked together with the digital agency Demodern is that of an insurance consultation in virtual reality. How can consumers actually imagine such a consultation and what is the advantage here compared to a consultation with a human insurance advisor?

This is actually our first project that we have developed for the B2C customer experience. Overall, however, we have been working on VR topics since 2018. For example, our digital division ERGO Digital Ventures has been holding business meetings in VR for over three years. At the beginning of the year, we announced that we would also be training independent sales partners in virtual reality in future. We also offer our employees a VR service: With "VR time-out", they can immerse themselves in a digital environment for 20 minutes at a time and take a break from everyday life. With VR consulting, we now also want to expand the customer experience for our customers and provide them with another channel through which they can reach us. To do this, they simply book an appointment via an ERGO landing page. They then receive the download link to the app in the Meta Quest Store, which they have to download and start for the consultation. They then conduct the consultation itself with the avatar of one of our real human insurance advisors in an immersive, interactive world; the metaverse, so to speak. We are currently using this for the case of travel health insurance for a hiking holiday. Customers can immerse themselves virtually in their destination before the trip and interactively familiarise themselves with the local conditions and risks. In addition to the previous mountain scenario, further use cases are already planned, for example in the areas of city breaks, skiing holidays or beach holidays.

Many companies are currently considering whether they should invest in Metaverse technology. In your opinion, where is the concrete added value if you still need a human insurance advisor to provide advice? Couldn't this also be done over the phone?

Technically speaking, you wouldn't need a human consultant. A bot could do that too. However, we are convinced that the human consulting service is simply completely different. What was more interesting for us was the immersive character of the Metaverse. After all, insurance products are often not very intuitive or easy to understand. We therefore considered how this customer experience could be improved. One idea was to make insurance products tangible and interactive. As with our VR consulting on travel insurance: in a small virtual suitcase, for example, the customer can see all the components of the travel insurance, such as a hospital bed, medication or the rescue helicopter. This allows an sales partner to explain the benefits very clearly. We have received feedback from our sales partners that customers repeatedly ask how exactly they can visualise a service. Interactive 3D elements can of course be a great support here.

This sounds like a positive reaction from sales partners to the introduction of VR consulting.

Many of our sales partners are very open to technology and innovation. That's why we initially looked for sales partners who were interested in consulting via VR when we launched the system. But we didn't have to search for long. Our sales partners told us that they now see themselves more as storytellers, picking up customers in a specific environment and acting like a local expert in this particular holiday environment - in real time and with other people, animals, nature and sound around them. This is completely different from working with a brochure, for example.

To what extent is this reflected in sales figures or in the likelihood of taking out insurance? Are customers more likely to take out travel insurance after a VR consultation than after an analogue consultation?

We do not communicate contract figures. However, we conduct regular NPS surveys and the recommendation rates for VR consulting are currently very positive.

ERGO is now also looking at risks in virtual, immersive contexts. That sounds pretty abstract. What kind of risks can these be and what form of cover is needed for them?

In principle, the risks are very similar to the analogue world or those already familiar on the internet, such as cyberattacks, cybersecurity, identity theft or data protection. What is new is that customers can also own virtual goods in the metaverse. These can be NFTs, for example, or properties in virtual worlds that customers acquire. Virtual goods must be secured in the same way as analogue goods. This also applies to virtual currencies. These are all issues that both insurers and customers should be addressing right now.

The slow spread of VR glasses is often named as a key barrier to the development of the metaverse. How does ERGO deal with this?

We were aware that we were entering a market that is not yet fully developed or ready for mass adoption. However, our aim is to be one of the first insurers in the metaverse to take the first steps, to learn and to be an early mover. If you get involved in such technologies too late, it is incredibly difficult to catch up with other companies that have already been involved at an early stage. Apart from that, we are seeing promising changes in the market right now. To my knowledge, up to 12 new VR headsets from different manufacturers are expected on the market in 2023 alone. And the announcement of the Apple Vision Pro glasses for 2024 has also received a lot of media attention. Everything currently suggests that the market is growing. With further advances in software and hardware, there will be further leaps in technology. We will then be well positioned.

Are you also planning to install virtual reality glasses in your sales offices? This would allow consumers to view insurance products in immersive reality.

There are currently no concrete plans for this. However, we have already had campaigns where we set up a stand at Düsseldorf Airport for the launch of our VR app, for example, where users who do not own VR glasses could test the service. That went down very well.

To what extent is virtual reality consulting part of a larger change that is currently affecting the industry? Is something happening that could soon affect other sectors?

We are seeing the shift towards virtual reality and metaverse in many sectors, especially the fashion industry. There is currently a lot of investment and experimentation going on, for example with virtual goods or virtual collections. The automotive industry is also using metaverse technology to design virtual products, for example. We are also observing the industrial metaverse, in which digital twins, for example of stadiums or production processes, are being used. So many things are already a reality across a wide range of industries and sectors.

In the insurance industry, we see that other insurers are increasingly moving to platforms and offering consulting services there. However, we at ERGO are pioneers in the area of immersive customer experiences.

Insurance is a very data-driven business. Which customer insights can be gained specifically via virtual reality in the insurance context and which are the most important?

So far, we have primarily been able to gain demographic insights. The virtual reality offering is particularly popular with a very young target group, i.e. 18 to 30-year-olds, who have a great affinity for digital technologies and are very intuitive with them thanks to their experience in the gaming sector. Otherwise, customer groups such as tech enthusiasts and early adopters in all segments use our offering. VR as an additional customer channel has been very well received.

Critics keep saying that the metaverse is just a hype that will soon pass. How do you counter this uncertainty?

Of course, we monitor the market and other sectors very closely. So we are not operating in a vacuum. We also do a lot of research. At the end of the day, we see the whole thing as an investment in the future, in which we are making a bet to a certain extent. But because innovation work can rarely be tied to a short-term business case, we primarily pursue long-term goals. In our opinion, not engaging with a technology is the worst option that companies can choose. We can only encourage them to test new technologies for themselves and thus also to make learning curves.

In other words, you would advise companies to consciously become active in the metaverse themselves?

Exactly. First of all, you should get an overview of the different platforms. There is currently an incredible variety. You need to get to grips with them, for example, understand which target groups are on the move and what they do there. And then it's almost like traditional campaign management: you have to think about the extent to which the technologies can help you achieve long-term marketing goals, for example by enabling marketing activities and providing the right target group in sufficient quantities. Marketers should also think about what added value a target group gets from meeting them in the metaverse. As a marketeer, I also need to be relevant to customers in the metaverse. The KPIs that tell me whether I am successful are not that different in the virtual reality context than in the print or social media sector, for example: we pay attention to app performance KPIs such as dwell time or bounce rates. Even when I place adverts in the metaverse, classic KPIs such as impressions count. So it's less abstract than you often think. You just have to try it out.

Thank you very much for the interview!

This interview was originally published in German in the trade journal "transfer - Zeitschrift für Kommunikation und Markenmanagement": www.transfer-zeitschrift.net