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Futurist in the press: Future of Insurance, Risk Management Solutions magazine


Quantum computing will present the insurance industry with an unparalleled opportunity to transform their businesses, in this interview with RMS I discuss how organisations can tackle the challenges that lie ahead.


Quantum computing is on many companies minds at the moment and the ability to crunch and process huge datasets and models that would have previously taken months or years in days and weeks seems tantalisingly close. In this interview Nigel Allen from Zebra Media and I chat through the evolution and prospects for the technology and how insurers can leverage it to their advantage, and if you’re hungry for more insights then why not check out my free 122 page Future of Insurance 2020 &Beyond report, no registration required.



Nigel: What is quantum computing and how does it differ from classical computing?

Matthew: In brief Quantum Computing is the use of Quantum Theory and Quantum Mechanics to create next generation computing platforms and systems that are hundreds of millions of times more powerful than today’s most powerful logic based systems that are built using traditional silicon technologies.


Nigel: What is the potential that quantum processing offers?

Matthew: Quantum computers excel as solving what we call “Optimisation” problems, and the two biggest benefits will be the staggering increases in processing speed, which in turn will let insurance companies process hundreds of multiples more information in just a fraction of the time that they do today, and the emergence of new, ultra secure quantum cryptography standards.


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Nigel: What are the key challenges in creating a quantum processor for commercial use?

Matthew: There are multiple challenges at the moment. Like any computing platform quantum computing platforms are made up of a variety of different components, very few of which are off the shelf and very few of which are anywhere near maturity. From compute to memory to networking and data storage companies are having to engineer a completely new technology stack. For example, using these new platforms companies will be able to process huge volumes of information at near instantaneous speeds, but even today’s best and fastest networking and storage technologies will struggle to keep up with the loads workloads – this is one of the reasons why companies are now also looking into building out DNA and atomic scale storage platforms that can scale to any size almost instantaneously, the first of which could be available courtesy of Microsoft in 2020. Other challenges include the operating temperature of the platforms which today have to be kept as close to Absolute Zero as possible in order to maintain a high degree of processing accuracy, but one day it’s hoped that these platforms will be able to operate at, or near, room temperature, and then there’s the “fitness” of the software stack – after all, very few, if any, software stacks today can handle anything like the demands that quantum computing will put onto them.


Nigel: How far are we along the evolutionary path to such a capability?

Matthew: There are, ostensibly, two types of quantum computing platforms being developed at the moment, and we can already see quantum computing’s successor, DNA computing, which will make quantum computing platforms look as modern, and as capable, as the stones we stand on.

When we discuss quantum computing there are two types of platform emerging – proprietary platforms, that some argue the quantum computing company DWave, who has sold it’s platforms to Google and NASA, fits into, and universal platforms. The latter is arguably the most interesting at the moment because unlike proprietary platforms that require a high degree of algorithmic and application tuning and optimisation the universal quantum computers, hence their name, will be able to run algorithms and applications that only require a minimal adjustment, and while DWave has had its platforms on the market for many years, with each machine typically coming in at $10 million a pop, it looks like the first universal quantum computing platforms will be available via a commercial cloud service, albeit a very, very limited one, in 2020.


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Nigel: From an insurance perspective, what does quantum computing offer?

Matthew: Quantum computers will bring insurers and their clients great benefits, but also great threats. One of the first threats, which is should also be said could be an opportunity for insurers, is the fact that once “true” quantum computers hit the 1,000 to 2,000 Qubit mark they will increasingly be able to be used to crack at least 70 percent of all of today’s encryption standards, and in the hands of a cyber criminal I don’t need to spell out that picture… On the benefits side though, these new platforms will let insurers process vastly more amounts of information than they do today and help them calculate risks, of almost any nature, in real time – from instantaneously modelling the impact of an approaching hurricane on a specific region to modelling the life expectancies of everyone on the planet, and everything in between, only the amount of data they have, or have access to, will limit them.


Nigel: Are we seeing much interaction between the insurance industry and quantum algorithm companies?

Matthew: There are a few insurers who are dipping their toe in the water and working with quantum algorithm companies to explore the technology and prod the bear so to speak, but not many. I put this down to a few factors – firstly many insurers are still battling the day to day challenges of digital transformation, the fact of the matter is that quantum computing, like blockchain, and other impactful technologies, still come quite a way down the priority list because in some respects they’re still seen as technologies that are on the distant horizon and not in their face like artificial intelligence. The second factor that affects experimentation and adoption, as I see it, is the fact that, like many companies, many insurance organisations rely on analyst predictions to help them formulate their technology and business timelines. Analysts seem to have a poor track record of predicting when a particular technology, or trend, will emerge, for example, 2017 is supposed to, again, be the year of VR, and autonomous vehicles were supposed to be a 2035 phenomenon – and we all know how that’s working out. Technology, and the pace of innovation and change, is accelerating rapidly, and quantum computing falls into that same bucket – a technology that is supposed to be available in earnest in 2040 we’ll start seeing the first, albeit very small scale systems, available in just two to three years time. Advanced technologies are emerging faster than ever before, and they are democratising faster than ever before and that’s only going to continue to accelerate – today is the slowest rate of change that any of us will ever experience again.


Nigel: How should companies in the insurance arena be looking to engage with quantum computing?

Matthew: I would suggest they go and explore the technology, talk to people within the quantum computing ecosystem and talk to their peers in other industries, such as financial services, who are gently prodding the bear. Being informed about the benefits and the pitfalls of a new technology is the first step in creating a well thought through strategy to embrace it, or not, as the case may be. At the moment there are four countries, for example, who are leading the quantum computing revolution and investing heavily in commercialising the technology, namely China, the UK, the US and Germany, and there are plenty of people and consortia that executives can sit down and talk to.


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Nigel: Given that it is a very new and relatively untested technology, does this also create opportunities for insurance companies to create related products?

Matthew: Technology is always great at helping organisations and industries create net new value – just as it’s also great at helping destroy old paradigms and “old” value. As with most technologies most companies first look at how these new technologies can save them money, and, or improve operational efficiency, and then they look at net new value creation. I’d argue that in this time of rapid change organisations should try to quickly evaluate all three, and evaluating the upsides of these technologies can be done in days and weeks not months and years. From an insurance perspective some of their new opportunities will revolve around the fact that they can analyse more data, faster to extrapolate better risk projections which, on the one hand could let them provide dynamic pricing, but also help them better model systemic risk patterns that are an increasing by product of the world that we live in, for example, in the fields of cybersecurity, healthcare and Internet of Things, to name but a fraction of the opportunities.


Nigel: The immense data analysing power delivered by quantum computing has the potential to greatly reduce uncertainty levels in predicting outcomes. Given that the industry essentially provides protection against uncertainty, could it spell the end of insurance as we know it?

Matthew: Quantum computing will certainly change the way insurers operate their businesses and model their risks, but overall the amount of risk in the world, whether it’s social, technological, economic, environmental or political, is reaching epidemic proportions and that’s only something that’s going to escalate. Take quantum computing itself, for example, its ability to brute force crack so many of today’s most popular encyryption standards will mean that the risk of a criminal taking down a critical national system, such as a power grid or an air traffic control system, increases not decreases and, from an insurance perspective, with increased risk comes increased opportunity – that is provided you can model the impact correctly and that will be the skill that differentiates the insurance companies of the future. Ergo, the opportunity for insurers to carve out new markets for themselves and build out new revenue streams is staggering.

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