Britain’s insurance industry has still not capitalized on the full potential of gaming

Five years ago, Riskheads asked if it was time for insurance companies to jump on the gaming industry bandwagon and start offering gaming insurance.

This was on the back of Japanese gaming company, Konami, enabling gamers to insure their property in Metal Gear Solid V. We felt this was one of the first indicators that this type of insurance would soon be necessary on a bigger scale.

But fast forward to 2020 and it appears that insurance for the gaming industry, while offered by a few specialist insurers, has not quite made it as a mainstream product.

While the global insurance industry can be forgiven for having to deal with the coronavirus (Covid-19) crisis this year, it did have a few years to get in the game (pardon the pun).

In our view, it’s an industry that’s worth a look into. For starters, the prizes within the gaming industry are astronomical and there are lots of young people winning big in the esports world. And with the way the industry is operating they can genuinely afford the premiums.

Take, for instance, 16-year-old Kyle Giersdorf who last year won a record-breaking $3 million (£2.41 million) when he became the Fortnite World Champion. He wasn’t the only winner.

The prize pool was the biggest in esports history with $30million (£24.10 million) being split among the winners. In the duo finals, 15-year-old Jaden Ashman, from London, split his £1.8 million prize with his Dutch teammate Dave Jong.

To give you an idea of just the sheer scale of the participants in a game like Fortnite, developer Epic Games pointed out that over 40 million players took part in the qualifying events from around the globe.

It’s not just the players that would need the insurance. There’s a whole eco-system that’s growing in and around the esports industry. There’s a real following too – around two million people are reported to have tuned in to watch the Fortnite final.

A growing market

If that doesn’t convince the insurance industry to sit up and take note, then perhaps a few stats on the overall size of the market could raise some eyebrows.

According to the Association for United Kingdom Interactive Entertainment (Ukie), the trade body for the whole of the UK’s games and interactive entertainment industry, the global software market is expected to grow from $137.9 billion (£110.80 billion) in 2018 to $180.1 billion (£144.63 billion) by the end of 2021.

As of June 2018, there were 2,261 active games companies in the UK with world-class talent across all types of games technologies from mobile, PC, console to fast-developing areas like virtual reality (VR), artificial intelligence (AR) and esports.

The UK market is also a respectable size and boasted the sixth largest video game market back in 2018 in terms of consumer revenues, behind China, the USA, Japan and Germany.

While professional gamers can win big money it’s also the amateurs that are contributing to the industry with around 37.3 million people in the UK playing games.

More people are also being employed in the gaming industry. Back in January, Ukie pointed out that there are eight towns and cities in the country where the games industry generates over £60 million in GVA (gross value added) into the local economy. They include cities like Edinburgh, Manchester, and London – to name but a few.

Ukie adds that the capital, London, is a billion-pound video game cluster, generating £1.4 billion in GVA and supporting over 5,100 FTEs (full-time equivalent) across the capital.

Scotland does well out of it too with the Scottish video games industry generating £131 million in GVA – making it the most economically productive of the devolved nations according to Ukie.

Those without ambitions to become professionals could even carve out a career out of it. Just recently there was a report on how a teen was earning nearly a £1,000 a month coaching other players how to game from the comfort of his home during the coronavirus lockdown.

From professionals, employees and through to those creating their own businesses, the gaming industry has a lot of potential for growth. The gaming industry may still be considered a niche market, but with millions of players taking part around the world can the insurance industry really afford to ignore it?

Image by Olya Adamovich from Pixabay 

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