The Impacts of Quantum Computing on Insurance
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The impacts of quantum computing on insurance February 2021 The impacts of quantum computing on insurance, 2021 Contents From theory to reality The (not so) basics of quantum computing Applications Quantum computing’s threat to cyber security The quantum landscape Insurance impacts – navigating the quantum realm Moving forward From theory to reality The impacts of quantum computing on insurance, 2021 Quantum computers within reach Insight Quantum computing harnesses the quantum mechanical Quantum computing has been around as a theoretical properties of very small objects, such as superposition and concept since the 1980s, but has only progressed to a In the field of quantum computing, the point at entanglement, to solve problems that are beyond the tangible reality more recently, with major developments which a programmable quantum device can reach of classical computing. There is a limit to how much and breakthroughs in hardware and software capabilities.3 perform a task that a classical computer more powerful our current computers can become. In 1994, Peter Shor introduced the first ever useful cannot perform in a feasible timescale, is Moore’s Law, which sees computing power double roughly quantum algorithm, which if implemented, could break referred to as quantum supremacy. every two years, is nearing its limit, due to physical commonly used encryption schemes such as RSA. Shor’s constraints involved in the further miniaturisation of algorithm, capable of solving mathematical problems In October 2019, Google achieved quantum transistor chips. Additionally, the speedup in computing underpinning many current cryptograms, which are supremacy for the first time in history. They offered by parallelization is limited by Amdahl’s law.1 impossibly difficult to solve using classical computing, is claimed that their 54-qubit processor, Therefore, solving and optimising multi-variable, real-world what ignited widespread interest in actually building the Sycamore, performed a task in 200 seconds, problems that necessitate the manipulation of large hardware that could support such algorithms.4 However, which would have taken a state-of-the-art datasets, requires an entirely new paradigm. only in 2019, with Google reaching quantum supremacy, supercomputer 10,000 years.6 was it shown that a quantum computer could actually Unlike classical computers, which require a two-fold solve a specific problem faster than a classical computer. increase in transistors to double in power, quantum IBM has since disputed Google’s claim of computers double in power by the mere addition of one Quantum computing today is more of an engineering quantum supremacy, by suggesting that an qubit - a quantum bit.2 This means, quantum computers problem than a theoretical one. The current development improved supercomputing technique could have the potential to deliver significant benefits to many state of quantum computing technology is comparable to theoretically perform the task in just 2.5 days industries by solving those optimisation, simulation and when classical computers were still using vacuum tubes, (yet a proof of this theoretical technique machine learning problems, which would otherwise take before their switch to transistors.5 Complex hardware remains to be seen). The clash between classical computers timescales ranging from 1000s of challenges and a shortage of talent in software these two giants is indicative of the fierce years to the lifetime of the universe. However, this development, means that a fully-fledged, commercially competition in the private sector to gain increase in computational power might turn out to be a available quantum computer might still be more than a dominance in this exciting new field.7 double edged sword – encryption systems that safeguard decade away. Nevertheless, the opportunity for most of our digital communications, and are designed to businesses to take advantage of quantum capabilities Regardless of IBM’s challenge, and despite be computationally intractable to crack using classical through API based cloud offerings, and discover which of the fact that the task that Sycamore computing, are potentially vulnerable to the speedups their needs quantum computers could eventually serve, is performed has no real-world application, offered by quantum algorithms. already within reach. Google’s achievement remains ground- breaking and has brought the reality of quantum computing within closer reach. Source: (1) Chojecki, 2019 (2) IBM Institute for Business Value, 2019 (3) McKinsey Quarterly, 2020 (4) Deloitte University Press, 2017 (5) RAND Corporation, 2020 (6) Arute, 2019 (7) Nature, 2019 The (not so) basics of quantum computing The impacts of quantum computing on insurance, 2021 The power of qubits In classical computing, data is represented by binary states of 1s or 0s, called bits. All our emails, images and videos on a computer are essentially a sequence of these ones and zeros. Superposition Entanglement The building blocks of a quantum computer are called quantum bits, or qubits for short. Unlike Classical bits, qubits can simultaneously be in a state of 1 --------------------------------------------------------------------------- --------------------------------------------------------------------------- and 0 or any probabilistic combination of the two. The ability to be in two states at the same time is The value of classical bits are kept well separated. However, qubits can interact with one another to create entangled states. When an operation called superposition and is what allows quantum Classical bits are discrete and can is carried out on one qubit, it has an instantaneous impact on other computers to run a vast number of calculations at only be in one of two states: 1 or 0. qubits it’s entangled with. This is what exponentially increases the information density in many quantum operations. Referred to by Einstein once. 1 Repeated calculations on the same 0 as ‘”spooky action at a distance”3, entanglement can happen over any input of bits will always give the length of distance. exact same output, due to their Classical computers solve problems sequentially deterministic nature. (one step at a time) and the bits on a transistor chip are constructed in a way to avoid interference Quantum Two unentangled qubits with one another. However, when the value of one ----------------------------------------------------------------------------- qubit changes, it can affect the value of other Qubits entangled by e.g. Qubits can have an infinite number qubits regardless of their distance, through a Laser operation of a laser. The of values between 1 and 0. These ? ? two qubits now exist in an process called entanglement. Superposition and superposition values of 1 and 0 can ? ? 1 indeterminate single entanglement are what allow quantum computers be negative, positive or complex and quantum state to achieve exponential speedups 1 are represented by a point on a Bloch sphere2. ? ? Entanglement can happen Qubits can be represented by any two-state Answers given by quantum ? ? over any distance 80% computers are probabilistic in quantum mechanical system that can be nature. When a qubit in manipulated electronically. The up and down 20% superposition is measured, the vast The measurement of one states of an electron’s spin or the horizontal and amount of information it carries 1 qubit breaks the vertical polarizations of light photons amongst cannot be captured. The quantum entanglement and causes state collapses to a discrete value of the qubit to collapse into other systems (superconducting circuits, quantum 0 1 or 0 on observation, with an Measurement one of the states 1 or 0. dots, ions, etc.) can be used to represent the 1s 0 associated probability. This means of one qubit When one qubit is and 0s that are needed to realize qubits.1 that computations on a quantum measured, the value of the computer would need to be repeated 0 other qubit is also instantly many times to converge on the 1 0 revealed. answer with the highest probability. Source: (1) Accenture Labs, 2017 (2) Boston Consulting Group, 2018 (3) Simonite, 2018 The impacts of quantum computing on insurance, 2021 How much faster are quantum computers? In addition to superposition and entanglement, which allow quantum computers to carry out calculations simultaneously, many quantum algorithms are also based on the idea of interference. The probability Exponential (significant) speedup – e.g. Shor’s algorithm amplitudes of different quantum states can interfere to Multiplying two prime numbers (e.g. 3×5 ), regardless of their size, is a trivial task. However, it turns out that the reverse of this, finding the prime either strengthen or weaken the probability of solutions factors of a number, is not so trivial. In fact, the difficulty of prime factorisation for very large numbers, is the basis of many common encryption standards, such as RSA, which secure most of our communications over the internet. Classical computers work through problems sequentially, which by cancelling out paths that lead to wrong answers and means that the complexity of prime factorisation can grow exponentially, the larger the number is. However, quantum computers tackle operations amplifying those that lead to correct ones. The aim of concurrently, which means the time it takes to find the prime factors of a very large number only grows linearly, as in the case of Shor’s algorithm for quantum algorithms are to amplify correct answers to prime factorisation. Where it would take a classical