Quantum Computing in Insurance
Quantum computing is expected to become a powerful tool for accelerating innovation and solving intractable business problems—and recent technological breakthroughs, increasing investment flows, and other trends signal it’s time for business and technology leaders to get planning. In a data-heavy world, ever-more powerful computers are essential to calculating probabilities accurately.
Why is that a Quantum Computer so fast? Classical computation bits are binary constructs with defined states. Bits can only exist as one of two possible values, 0 or 1. When bits are linked in a string of n bits, each string can be one of 2n permutations. The number of possible combinations grows exponentially as string length is extended. A 24-bit code includes 224 combinations of 0s and 1s, and each requires individual consideration during analysis. Let’s assume that it takes a computer half a second to analyze this single, 24-bit-long string. There are 16,777,216 combinations to test in this scenario. The computer will need 8,388,608 seconds—just over 97 days—to analyze every possible combination of 1s and 0s. Quantum bits, known as qubits, play the role of classical bits in quantum computing. Unlike a classical bit, which exists as either 0 or 1, a qubit exists simultaneously as 0 and 1 until observed/measured, at which point it is “forced” into a known state of either 0 or 1. This quantum mechanical property is known as quantum superposition.
I first saw the physical QC infrastructure at an IBM Think conference and I wrote about it in April 2019 here:
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Quantum technology is poised to fundamentally impact the way financial institutions do business. Data protection, risk modeling, portfolio management, and select processes enhanced by artificial intelligence and machine learning solutions may look very different in a quantum world. For e.g., Google, said in 2019 that its Sycamore quantum processor took a little more than three minutes to perform a task that would occupy a supercomputer for thousands of years. The experiment was subject to caveats but effectively demonstrated quantum computing’s potential, which in relative terms is off the scale.
Quantum vendors are increasingly targeting the insurance space and working to develop custom business use cases that leverage quantum technologies. Insurers companies that adopt quantum early may achieve key competitive advantages in risk modeling accuracy and expanded artificial intelligence and machine learning capabilities. The insurance use cases include:
Insurers will be looking to start integrating quantum readiness into their three-to-five-year IT strategy roadmaps and develop an actionable plan to address the industry-wide impact quantum technologies may have
