Largest U.S. property and casualty insurer enters quantum computing
The Chicago Quantum Exchange (CQE), a U.S. quantum technology consortium, announced the addition of six new corporate partners: state Farm, QuEra Computing Inc., PsiQuantum, qBraid, and QuantCAD LLC; in addition, Le Lab Quantique (LLQ), a Paris-based quantum laboratory, will be non-profit partner [1].
Together, the Chicago Quantum Exchange institutions and partners are driving the science and engineering needed to build and scale quantum technologies and develop practical applications. CQE membership now includes more than 30 companies and nonprofit organizations that are developing the potential of quantum technologies to solve critical societal problems as members of an emerging global ecosystem.
Among the new members joining CQE this time, State Farm, a leading national insurance company in the U.S., has established a quantum team within its innovation division: Labs @ State Farm, signaling that the insurance industry is beginning to explore potential quantum computing solutions to better meet customer present/future needs.
01How the insurance industry can benefit from quantum computing
Quantum computing can handle large amounts of data very well, allowing for a better understanding of risk and providing opportunities to improve pricing and risk models in the underwriting process. There is also the opportunity to work with customers to share risk-related data to create better products [2].
1) Operational Benefits
The increasing deployment of Internet of Things (IoT) devices and sensors in a variety of environments has led to a dramatic increase in the volume and veracity of data available to insurers. Quantum computing is well positioned to handle this vast amount of data, enabling greater understanding of risk and providing opportunities to improve pricing and risk models in the underwriting process. There are also opportunities to collaborate with clients to share risk-related data to create better products.
The ability to accurately model weather systems has greatly improved catastrophe modeling (for property insurance), facilitating the process of pricing, reserving and setting policy limits. Modeling of other comprehensive risks, such as supply chain disruption, liability risk or cyber, can also benefit from quantum computing capabilities.
Improved customer relationship management (CRM). Quantum computing can more accurately target customers and predict their preferences based on their behavioral data. This can improve customer satisfaction and retention by providing more preemptive insurance product and service recommendations to policyholders.
Improved natural language processing (NLP) capabilities can lead to better fraud detection, market insights, trend analysis and predictive analytics models.
Leverage rapid data flow from smart devices to automate claims functions in real time, reducing costs and increasing efficiency. When quantum solutions begin to emerge, insurers that invest proactively can gain a significant competitive advantage based on the various operational benefits that quantum computing provides to insurers.
In addition, QCaaS (Quantum Computing as a Service) available through the cloud has the potential to produce "killer applications" for the insurance industry, which increases the opportunity cost for insurers not to invest in quantum solutions.
2) Business Benefits
There are many areas of insurance business that will be impacted by the emergence of quantum computing. However, the greatest potential impact comes from the cyber security risks associated with encryption-related quantum computers. Cyber risk by its very nature can impact many insurance business areas and virtually all industries.
With the cryptographic threat of quantum computing preceding the full adoption of PQC (post-quantum cryptography) or other quantum security protocols, the world and the insurance industry face a systemic cyber risk that can affect everything from the security of our text messages to state-guarded secrets and access to military codes.
Quantum computing also exacerbates the risks faced by artificial intelligence (AI) technologies, as quantum computing will increase the capabilities of machine learning (ML), leading to broader adoption of ML and AI solutions and products across all industries.
02Opportunities and challenges coexist
1) Operational Benefits
The increasing deployment of Internet of Things (IoT) devices and sensors in a variety of environments has led to a dramatic increase in the volume and veracity of data available to insurers. Quantum computing is well positioned to handle this vast amount of data, enabling greater understanding of risk and providing opportunities to improve pricing and risk models in the underwriting process. There are also opportunities to collaborate with clients to share risk-related data to create better products.
The ability to accurately model weather systems has greatly improved catastrophe modeling (for property insurance), facilitating the process of pricing, reserving and setting policy limits. Modeling of other comprehensive risks, such as supply chain disruption, liability risk or cyber, can also benefit from quantum computing capabilities.
Improved customer relationship management (CRM). Quantum computing can more accurately target customers and predict their preferences based on their behavioral data. This can improve customer satisfaction and retention by providing more preemptive insurance product and service recommendations to policyholders.
Improved natural language processing (NLP) capabilities can lead to better fraud detection, market insights, trend analysis and predictive analytics models.
Leverage rapid data flow from smart devices to automate claims functions in real time, reducing costs and increasing efficiency. When quantum solutions begin to emerge, insurers that invest proactively can gain a significant competitive advantage based on the various operational benefits that quantum computing provides to insurers.
In addition, QCaaS (Quantum Computing as a Service) available through the cloud has the potential to produce "killer applications" for the insurance industry, which increases the opportunity cost for insurers not to invest in quantum solutions.
2) Business Benefits
There are many areas of insurance business that will be impacted by the emergence of quantum computing. However, the greatest potential impact comes from the cyber security risks associated with encryption-related quantum computers. Cyber risk by its very nature can impact many insurance business areas and virtually all industries.
With the cryptographic threat of quantum computing preceding the full adoption of PQC (post-quantum cryptography) or other quantum security protocols, the world and the insurance industry face a systemic cyber risk that can affect everything from the security of our text messages to state-guarded secrets and access to military codes.
Quantum computing also exacerbates the risks faced by artificial intelligence (AI) technologies, as quantum computing will increase the capabilities of machine learning (ML), leading to broader adoption of ML and AI solutions and products across all industries.
02Opportunities and challenges coexist
Specifically, companies can lay out quantum computing through three major initiatives.
1) Fully utilize the data potential
Quantum computing is an extension of the cloud, where wearable devices and IoT technologies will bring more data to underwriters through cloud computing. Currently, artificial intelligence is supporting underwriters in the process of collecting, analyzing and understanding much of the data available to them. But as individual customer data continues to grow, quantum computing can help insurers find larger patterns and make better predictions about where the market is going.
Quantum computing can also help insurers assess risk on a larger scale: At the heart of risk assessment is figuring out how likely things are to go wrong. In the insurance industry, quantum computing could completely reshape the underwriting process. Quantum computing is already being used by Goldman Sachs (in partnership with quantum computing companies IonQ and QC Ware) for risk assessment in the financial industry, for sales forecasting and for financial market behavior.
An important application of quantum computing is predictive risk modeling around the effects of climate change. Quantum computing can handle complex intersecting factors that help assess the risks associated with environmental events such as wildfires and tornadoes. Unprecedented natural disasters may continue to affect our property and health, and quantum computing can reduce the unknowns and help underwriters understand what the future may hold. With improved scenario modeling capabilities, underwriters can more accurately provide the coverage their customers need while driving top-line growth, even as our climate becomes more volatile.
As quantum computing becomes part of every business strategy, today's insurers need to evaluate their current technology liabilities. Change is coming quickly. Once the key achievements of quantum computing are unlocked, the gap between early adopters and laggards will rapidly widen.
2) Taking the first steps toward quantum computing enablement
One of the major obstacles outlined in the Technology Vision is the widening gap between technological innovation and the skills needed to operate the technology. Leaders in every industry will need to consider how to train and hire talent to run the organizations of the future, which includes quantum computing.
Insurers also need to consider whether they have the right decision makers, and having a diverse team to handle aggressive planning is critical. In addition to bringing in the right talent to support initiatives related to quantum computing, building partnerships will help leaders achieve scalable results at a more reasonable cost (human, technical and financial resources).
Leaders in the insurance industry are slowly joining the arms race for quantum dominance. German multinational reinsurer Munich Re is a founding member of the country's Quantum Technologies and Applications Consortium; in the U.S., the Quantum Economic Development Consortium (QED-C) is one of the leading alliances dedicated to quantum innovation, with current members including AT&T, Wells Fargo, Boeing and Honeywell.
3) From Cloud to Quantum
Quantum computing will change the way we use data, adding exponential value to the data collected through cloud-based technologies, and the digital world will only become more connected to physical reality. As we innovate the human experience, the amount of valuable data available to organizations will continue to grow. To take full advantage of this data explosion, insurers need to take quantum computing seriously as part of their overall cloud and data strategy.
Reference links：
[1]https://chicagoquantum.org/news/chicago-quantum-exchange-welcomes-six-new-partners-highlighting-quantum-technology-solutions
[2]https://sydneyquantum.org/news/quantum-computing-in-insurance-opportunities-and-threats/
[3]https://insuranceblog.accenture.com/quantum-computing-insurance
[4]https://www.accenture.com/us-en/insights/technology/technology-trends-2022
[5]https://finadium.com/lloyds-impacts-of-quantum-computing-on-insurance/
