York University’s Risk and Insurance Studies Centre (RISC) is a global Think Tank who leads research in the area of Risk Management and Insurance with the aim towards a sustainable future.
The Risk and Insurance Studies Centre (RISC) at York University in Ontario, Canada, conducts important research that facilitates dialogue between academia, private industry, the public sector, and government bodies. In studying people’s readiness to purchase extra protection in the event of a fire, the scholars at RISC hypothesized that people would be more willing to purchase this insurance after exposure to a housefire.
Housefires represent one of the most common emergencies experienced by Canadians, which can be devasting for those affected and very costly for the economy. However, only a tiny percentage of the population has experienced a housefire in their lifetime. Exposing people to a housefire is a difficult situation to safely create and replicate even in a controlled environment.
When faced with an uncertain outcome, our likelihood of experiencing a loss and our risk tolerance are two of the major determinants of our decision to purchase insurance. However, they are not observable. Choice experiments, responses to a set of survey questions based on hypothetical situations, are widely used in economics to elicit consumer preferences or valuations that are not observed. Choice experiments are used, for example, by firms to price new products and by policymakers to elicit our valuation of public goods such as clean air or public education.
The problem is that choice experiments are subject to hypothetical bias – the potential error that arises in our choices because we are faced with a hypothetical rather than an actual situation. Research shows that using VR for choice experiments can attenuate this bias.
Virtual Reality (VR) is a perfect solution to address the issues at hand. First, it can simulate a potentially dangerous experience in a safe, controlled environment and make it repeatable. Second, VR can reduce the hypothetical bias in choice experiments.
With funding support from eCampus Ontario, RISC developed a VR housefire simulation. In the development, ensuring the experience was real enough to stimulate an emotional response but not so real as to cause physical, mental, or emotional damage was the main consideration. The Centre procured Oculus Quest devices to deliver the experience for up to 20 participants at a time in a tethered environment. The experiment involved approximately 120 subjects completing a survey asking them to rate their willingness to pay for added fire protection on their insurance policies. After a period of six to eight weeks, the subjects experienced the VR simulation and then took the same survey to measure the change (if any) in their responses.
Xpan Interactive developed the simulation as a holographic environment using Unity as the graphics engine. The project was completed in a six-week production cycle and on limited budget. The Xpan and RISC teams used an agile workflow and collaborated to make the concept a reality and bring the housefire scenario to life.
The simulation was completed on budget and delivered as a three-minute experience to reproduce the emotional reaction of someone experiencing a housefire. The length of the simulation is in line with the average time one has to escape a housefire nowadays. Using a combination of visual and audio effects, the simulation was very effective in testing. It created a real impact on users, eliciting the intended fear response while preserving the physical and psychological safety of the participants.
Select the tile or click HERE to see a compressed recording of the simulation in action.
The simulation can be accessed on the eCampus Ontario Open Library. Please see access details below:
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