What is Web3? What are the opportunities and risks for insurers? Oliver Wyman’s latest research finds the Web3 economy is currently under-insured and has huge potential for future growth.
While there is some hype surrounding digital assets, decentralized finance, and Web3, there is also substance that has the potential to fundamentally transform parts of our modern financial system. We believe it's time for insurers to pay attention. 40 million people in the US reported investing, trading or using cryptocurrencies in 2021 (as compared to 5 million in 2015). Venture capitalists are increasing their investments in crypto infrastructure and Web3 companies. The US is developing a comprehensive policy framework. An increasing number of insurers are entering the space, and new decentralized autonomous organizations (DAOs) are being founded every day.
There are many scenarios for how the Web3 economy will evolve, especially with reference to data in this rapidly changing market. This paper seeks to go beyond the “headline of the day”, or prospects for any individual cryptocurrency or digital asset, and explores the broader Web3 opportunity for insurers.
We see two main dimensions of the Web3 opportunity for insurers:
- First, the Web3 economy is currently under-insured and has huge potential for future growth. Today, out of $1 trillion in crypto assets, less than 1% are insured. There is significant unmet demand from retail and institutional investors, as well as businesses. The key questions are what risks companies can prudently underwrite — and what companies will win the race to achieve scale.
- Second, companies can leverage Web3 technology to reinvent the insurance value chain, creating propositions and business models that are better, faster, and cheaper. In the near-term, Web3-based propositions can help insurers reach new customers and address unmet customer needs. In the longer-term, Web3 offers the potential to reimagine business models that radically challenge what an insurer can look like.
How should insurers navigate the Web3 landscape?
This paper provides a practical guide for insurance executives on Web3 to separate hype from reality, to create a structured way of classifying and assessing opportunities, and to arm leaders with a set of key questions to guide their deliberations on what strategic moves they should make as they look to navigate through this rapidly evolving space.Explore opportunities for insuring the Web3 economy, reaching new customers, and reinventing business models — that may radically change what an insurer can look like.
The content includes in-depth research, statistics, terminology, case studies, a Web3 primer, perspectives on how insurers can think about the Web3 space, and where to pursue opportunities to maximize value for customers.
Will Web3 Reinvent Insurance? Why it’s Time to Pay Attention