Technology-fuelled disruption has been sweeping through the global financial sector in recent years towards commercial viability. Insurance as we know it is a space that thrives on the collection and analysis of data while quantum computing (QC) is essential to calculating multiple combinations of variables at once accurately. With expanded artificial intelligence and machine learning capabilities, the ability to process and analyse massive data in unimaginable speeds – gives key competitive advantages in risk modeling accuracy, pricing, optimization of strategic asset allocation, fraud detection etc.

In this interview, we speak to Paolo Cuomo, Co-founder Quantum London and Director, Gallagher Re to find out more on Quantum Computing in Insurance, why Quantum Tech Asia summit comes at a critical time and ways we can get quantum ready. With all the hype surrounding QC, find out why business leaders should consider it now.

Are insurance companies playing a major role in industry and pan-industry initiatives around quantum computer?

No, compared to other industries there is relatively little involvement from insurance companies in major initiatives, though an obvious exception is Munich Re’s involvement in Germany’s Quantum Technology & Application Consortium. The US’ Quantum Economic Development Consortium (QED-C) has over 150 members but no representation from the insurance industry, I believe. Similarly, there are no insurers obviously involved in Japan’s Quantum Innovation Initiative Consortium (QIIC).

This is not uncommon as insurers have far smaller “R&D” budgets than many other industries. It will be interesting to see how this evolves as quantum computing moves from “one day” to “soon” in the minds of insurance executives.

Quantum computing has the potential to help insurers assess risk on a much larger scale, what other benefits does QC bring to the table?

One of the exciting aspects about QC is that it is impossible to really predict how people will use them once they are readily available. Much as the current usage of technologies such as the internet and smartphones was unimaginable to us in the 1990s and early 2000s, the application of QC is almost certainly going to be broad than what we can envision today.

We know of course that quantum computers are very well suited to solving certain combinatorial problems and particular types of simulation. We live in an increasingly interconnected world where supply chain risk and business continuity are of growing importance to insurers and their clients. It is likely to QC will enable better modelling of potential problems.

The below chart, derived from one regularly used by IBM, visualises this expected outcome: the possible execution of problems we are “waiting to solve” as well as a role in answer questions we haven’t yet asked ourselves.

Source: Paolo Cuomo

How can quantum computing can help insurers to find larger patterns and make better predictions about the evolving risk landscape?

As things start, “predicting the future” is not a likely near-term use of quantum computers. Although they are likely to support pattern recognition and identification of trends, many of the challenges insurers’ clients face are hard to extrapolate from the post, however powerful your computer. Areas such as cybercrime, climate change and social inflation are priorities to solve for but are constantly triggering new types of claims, different from those of the past. That said, the sooner these changes are spotted, the sooner the insurers (and their clients) can react, and in some cases quantum computers may spot the changing trends sooner than current methods

Now, quantum computing in the Financial Services Industry has a lot of different use cases, from risk analysis to portfolio optimization and credit risk. Is there a particular use case that, or use cases that you found are interesting?

I am interested in how quantum computing will impact areas such as investment portfolio optimisation for asset managers, pension funds, insurers etc. Even if the initial improvements from quantum-based and quantum-inspired algos is only tiny, the volume of money in these portfolios is so huge that the benefits should pay for the next phase of R&D, creating a virtuous cycle.

Looking more broadly I am interested in the broad range of uses in the climate and sustainability space. This is an area of true urgency and is ripe for quantum-based solutions. This can be as simple as the optimisation of logistics networks and airplane routes to reduce fuel, through the QC simulation of fertiliser product to invent new means of production (important given that century-old Haber-Bosch process for manufacturing fertilizer is so energy intensive that it produces 2-3% of global CO2 emissions)

What does it mean to be #QuantumReady? And how can executives prepare to be #QuantumReady?

Given the unknown timelines for quantum computing it is not appropriate for most companies in the sector to be investing significantly at this stage. However, it is equally inappropriate to say “I’ll wait until we see real movement then we’ll be fast followers”. Fast following is incredibly tricky from a standing start so companies should identify steps to make sure they are already moving in the right direction, albeit with limited investment or risk.

This includes understanding who in the business is interested in the topic and where QC leadership and responsibility will best sit. Modest spend on conferences and workshops will let those people get to known each other and create an organic network for discussing QC. In parallel meeting different QC consulting firms and advisors will let you understand which best fit with your firm so that you can start to build that relationship ahead of major investments. By flagging Quantum Computing/ Quantum Technology as a future thing to executive teams means that when it needs to be discussed in more detail, it won’t be a surprise.

It's important to be able to integrate experts that are not quantum experts. So experts in trading or experts in life insurance or experts in chemistry, depending on the business problem. What are your thoughts?

We of course bump into is the age-old question of whether it is better to teach tech to a business person or teach the business to your tech expert. There are lessons to be learnt about how companies successfully (or not) integrated Machine Learning/AI expertise.

QC has a major advantage over some other emerging technologies. This is that the can relatively easily disaggregate the “thinking” from the “doing”. What I mean by this is that understanding the type of problems and computations a QC is good for can be learnt relatively quickly by a smart business expert. The actual implementation of the quantum computing solution can be done separately by the required technical expert (or a third-party). As such I expect that we will be seeing the most value from an experienced business team, pollinated by quantum teachers. What is equally important is a “learn and try” mindset where the technologists and business experts (along with third parties where appropriate) investigate the opportunities together. 

How can you achieve organizational buy-in? What can companies be doing? What should we NOT do to prepare for QT as a company?

Engaging the business with emerging tech has always been hard. At the moment it is even harder than usual – partly due to budget challenges and partly due to the handover from blockchain promises that never came to fruition. For QC/QT you need to further add in the challenges of unknown timelines and the scary language and concepts. As such the trick is to find the right places to start and the right people to take lead, as well as the right partners. What most companies should absolutely NOT do is to make a big deal about their quantum plans and plan major investments.

What do you find most valuable about being a part of Quantum.Tech APAC and what will you be sharing at the event?

The number of real-world use cases is growing and there is huge amount to be learnt between industries as the underlying way problems are solved typically has more to do with the nature of the problem than the industry. Drawing such a broad range of global experts into one place creates a very fertile ground for the exchange of ideas. Industry conferences are typically more valuable for the participants than the speakers; in the case of QuantumTech APAC the who ecosystem will benefit from so many people being together.

Register now for QuantumTech Asia 2023 and be a part of shaping the future of technology. Grab your tickets online at https://quantumtechapac.wbresearch.com/agenda-mc