Augmented Reality Meets Insurance: A New Dimension of Risk

Augmented Reality has come a long way – from clunky headsets to apps we now use without even thinking. The term Augmented Reality (AR) became widely recognised in the1990s, particularly in aerospace and military sectors, however the concept dates back much further than this. By the early 2000s, AR began appearing in consumer-facing products, such as mobile apps and gaming. The launch of smartphones with cameras and GPS enabled AR to go mainstream – think Pokémon GO (who can remember that craze?), which brought location-based AR to millions.

Today, AR is no longer just about entertainment. It’s a tool for visualisation, training, and interaction across industries. With the rise of wearable tech, 5G connectivity, and AI integration, AR is becoming more immersive and responsive. From overlaying surgical guides in operating rooms to enabling remote collaboration on construction sites, AR is reshaping how we perceive and interact with reality.

AR is being adopted across a wide range of sectors for its ability to improve efficiency, engagement, and decision-making:

Manufacturing – use it for real-time instructions, remote maintenance, quality control. Some benefits include – reduced errors, faster training. However, insurance risks include situations where AR instructions are wrong or delayed, workers might make mistakes that damage equipment or cause injury – raising questions about who’s liable. Because production often depends heavily on AR systems, any technical failure could lead to costly downtime. Remote maintenance using AR can also result in errors if instructions aren’t clear, which may expose technicians to liability. Finally, AR devices like headsets can distract workers or block their vision, increasing the chance of accidents on the factory floor.

In Healthcare it’s being used for – Surgical overlays, anatomy visualization, remote diagnostics. Benefits include – Improved precision, and enhanced training. The risk exposures can lead to medical malpractice if AR guidance leads to surgical errors or misdiagnosis, product liability for faulty AR software or hardware used in procedures, cybersecurity risks from patient data breaches during remote diagnostics, professional indemnity claims for incorrect clinical decisions based on AR inputs.

Retail & E-commerce sector uses AR for virtual try-ons, product visualization, interactive shopping experiences. Benefits include, higher engagement, and reduced returns. Insurance risks include data privacy concerns from biometric scanning (e.g. facial mapping), misrepresentation claims if virtual products differ from reality and consumer injury from faulty AR hardware (e.g. smart mirrors or headsets).

Education – Immersive learning, virtual field trips, 3D models. Benefits include – better retention, and inclusive learning. Insurance risks include inaccurate AR content, student data tracking, physical strain from headset use, and accessibility issues if tools exclude certain learners.

Real Estate – Virtual property tours, and architectural overlays. Benefits include – Faster decisions, and improved client experience. Insurance risks include misrepresentation from virtual staging or overlays mislead buyers, negligence claims from inaccurate property dimensions or features, copyright infringement from using third-party AR content without permission, cyber risks from client data stored in AR platforms.

Experts may not agree on the exact numbers, but they do agree on one thing: Augmented Reality is expanding rapidly. Some forecasts suggest the global AR market could reach USD$511 billion by 2030[1], while others estimate a more modest figure of around USD 100 billion[2]. These differences stem from varying predictions about adoption rates, technology development, and industry uptake. But no matter the number, the direction is clear – AR is becoming a regular part of how businesses operate.

As AR becomes more integrated into everyday operations, insurers will need to adapt their coverage to address new types of risk. These include product liability, equipment failure, and operational errors that may arise when businesses rely on AR technology. The challenge is not just to respond to these risks – but to stay ahead of them by evolving insurance models to meet the needs of a tech-driven world.

Augmented Reality has already made its mark – but the journey is far from over. As AR continues to evolve, it’s moving beyond novelty and becoming a practical tool across industries. From improving training in factories to enhancing customer experiences in retail, AR is proving its value in real-world settings.

For insurers, this shift presents both opportunity and responsibility. As businesses adopt AR to boost efficiency and engagement, insurance providers must keep pace – offering coverage that reflects the risks of using advanced technology. That means thinking ahead, adapting policies, and working closely with clients to understand how AR fits into their operations.

Looking forward, AR will likely become even more integrated into daily life and business. The question isn’t whether AR will grow – it’s how industries, including insurance, will grow with it.

Important Notice

Berkley Insurance Company (limited company incorporated in Delaware, USA) ABN 53 126 559 706 t/as Berkley Insurance Australia is an APRA authorised general insurer. Information provided is general only, intended for brokers and has been prepared without taking into account any person’s particular objectives, financial situation or needs. Insurance cover is subject to terms, conditions, limits, and exclusions. When making a decision to buy or continue to hold a product, you should review the relevant policy documents.

[1] https://www.mordorintelligence.com/industry-reports/augmented-reality-market

[2] https://www.grandviewresearch.com/industry-analysis/augmented-reality-market