Insurance underwriting is essentially a data-driven practice. With an increasingly interconnected world producing far more data than an individual can process, computers and artificial intelligence have stepped in to support data analysis and decision making. Quantum computing has the potential to change the way the insurance industry uses data in underwriting, and beyond.
While we are still several years away from realizing the full capabilities of quantum computing, insurers need to take the future of quantum seriously for their current strategies. The cloud is the basis for the successful implementation of quantum computing. Telecom companies need to boost cloud adoption and improve the way they leverage the cloud to collect data in preparation for using quantum computing going forward.
Why insurance companies should care about the potential of quantum computing
For the past several years, Accenture has been chasing the line of quantum computing innovation. Insights from the latest Technology Vision 2022 report reveal that we are entering a new era of digital transformation where innovation and economic success will be driven by unprecedented computing power.
Quantum computing allows us to solve problems that are too complex for conventional computers. In this context, complexity refers to an almost unimaginably large volume of variables interacting in complex ways. To use an example from the report: In logistics, a single flight with 16 stops has 20 trillion possible routes. A classical computer would have to work through each possibility individually to find the most efficient path, which would take even the fastest computers decades to figure out.
As innovations in quantum computing become commercially viable—not just possible in an academic setting—working with huge data sets will be achievable for the average enterprise.
Accenture expects that 80% of workloads will be in the cloud in the next few years. This means more opportunities to collect data generated by workflows and behaviors that occur across the digital world. With quantum computing capabilities, companies will be able to extract insights from this ever-growing volume of data to drive value in their business.
To quote the technology vision, “Companies should look for white space opportunities where more specialized or powerful computing can impact their industry at scale.” Insurers that take the lead in increasing their computational resources could stand an advantage as we move into a world of augmented reality, IoT wearables, and computer vision—a world in which capturing data is easier than ever and in which the volume and complexity of data only continues to increase.
Use data to its fullest potential
Quantum computing is an extension of the cloud and can make what we already do in the cloud more valuable. In one of my recent posts, I talked a little bit about how wearables and IoT technology can bring more data to insurance companies through the cloud. Currently, AI is supporting insurers through the process of collecting, analyzing, and making sense of much of the data available to them. But as data on individual customers continues to proliferate, quantum computing can help insurers find larger patterns and make better predictions about market direction.
Quantum computing could also help insurers assess risk on a much larger scale. Risk assessment, in essence, is knowing 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 to assess risk in the financial industry to predict sales and financial market behavior by Goldman Sachs (in partnership with quantum computing firms IonQ and QC Ware). In the same way that a quantum computer can quickly determine the most efficient charging routes out of 20 trillion options, it can also determine the probability of an individual getting into a car accident at a given intersection.
An important application of quantum computing is predictive risk modeling about the effects of climate change. Quantum computing can manipulate the complex intersection of factors that contribute to risk assessment associated with environmental events such as wildfires and hurricanes. Unprecedented natural disasters are likely to continue to affect our possessions, and quantum computing and our health can reduce the unknown to help carriers understand what the future might hold. With enhanced scenario modeling capabilities, insurers can more accurately provide the coverage customers need while driving top line growth, even as our climate becomes more volatile.
As we approach a world where quantum computing is part of every enterprise strategy, today’s insurers need to take stock of their existing technical debt. Change is coming quickly. Once major breakthroughs in quantum computing are unlocked, the gap between early adopters and laggards will widen rapidly.
Taking the first steps towards enabling quantum computing
One of the major obstacles described in the technology vision is the widening gap between technological innovation and the skills required to operate that technology. Leaders in every industry need to think about how they will train and recruit the talent they will need to run the organizations of the future, which includes quantum computing. A study cited in Technology Vision from the UK found that there is a severe shortage of computing professionals at scale. Insurance companies can create demand for these roles to motivate job seekers and focus on upskilling existing employees.
Insurance companies also need to consider whether they have the right decision makers in the room. Do you currently have individuals on your team who are able to think about upcoming challenges and opportunities to form robust strategies for dealing with the disorder? Having a diverse team that handles proactive planning is crucial. Showcasing a range of perspectives and backgrounds will lead to more accurate and comprehensive problem solving.
In addition to bringing in the right talent to support initiatives around quantum computing, forging partnerships will help leaders achieve scalable results at a reasonable cost – in terms of human, technological and financial resources. The Technology Vision report recommends joining a consortium that facilitates quantum computing power across the entire industry.
In healthcare, a consortium between NVIDIA, AstraZeneca and GlaxoSmithKline (GSK) around Cambridge-1, the UK’s most powerful supercomputer, has resulted in a generative AI model of chemical structures. It has helped bring new drugs to market faster than before by using predictive modeling.
Insurance leaders are slowly joining the arms race for quantitative supremacy. German multinational reinsurer Munich Re is a founding member of the country’s Quantum Technology and Applications Consortium. In the US, the Quantum Economic Development Consortium (QED-C) is one of the core consortia working on quantum innovation and members currently include companies such as AT&T, Wells Fargo, Boeing, and Honeywell. There are plenty of opportunities for insurers to be the first to get involved in quantum computing research and development.
From cloud to quantum
Quantum computing will change the way we use data, adding exponential value to data already collected through cloud-based technology. The digital world will become more involved with the physical reality. The amount of valuable data organizations can access will also continue to increase as we innovate in the human experience. To take full advantage of this data explosion, insurers need to take quantum computing seriously as part of their comprehensive cloud and data strategy.
I’d like to discuss how your cloud strategy can maximize the future of quantum computing. Please get in touch with me.