The strategy is part of Hunt’s aim to turn the UK into a ’science and technology superpower’ - a new AI sandbox will also be launched 

Chancellor of the exchequer Jeremy Hunt pledged £2.5bn over the next 10 years to the UK government’s new quantum computing strategy last week (15 March 2023) during the announcement of his spring budget.

The government added that it was aiming for the UK to become a global leader by establishing global standards for quantum technologies and would lead the way in trialling quantum technologies in the UK.

Quantum computing is a form of computing that utilises the principles of quantum physics to process many different possibilities at once – making it much faster at solving certain problems than classical computing. 

Potential use cases for quantum computing in the insurance sector involve improved risk and catastrophe modelling, alongside fraud detection and portfolio optimisation. 

Hunt said the government’s 10 year quantum strategy, which was part of his plans for the UK to become a “science and technology superpower”, was aiming for the UK to have a 15% share of global private equity investment into quantum technology firms by 2033.

The UK currently has as an estimated 9% of the global market share in quantum technologies, according to the government’s analysis in its 10 year plan. 

In a statement, the government said it would also establish a “new artificial intelligence (AI) sandbox” to test how regulations could be applied to the future of AI without “blocking innovators in getting their cutting-edge products to market”.   

The government said it hoped the sandbox would support research into AI, which has played an increasing role in financial services like insurance.

Nigel Green, chief executive of financial services firm DeVere Group, said that AI would “fundamentally reshape” the financial services industry for firms, consumers and markets.

The government’s quantum strategy build on Sir Patrick Vallance’s recommendations from his Pro-innovation regulation of technologies review: digital technologies report, published on the same day as the budget, and the launch of a new national fintech hub earlier this month. 

Changing the world 

Green added that he believes financial services, including the insurance sector, will become defined by AI in the coming years.

He explained: “Despite the lack of familiarity for most people, AI is a technology that’s transforming the way we do business, interact and, without exaggeration, how we live.

“It’s a wide-ranging technology that enables people to rethink how we integrate information, analyse data and use the resulting insights to enhance our decision-making. AI is already changing the world and raising important issues for society, the economy and governance.

“Whilst there are also concerns about the ethical and social implications of AI – such as privacy and bias – it has the potential to bring about considerable positive changes, not least in areas including healthcare, education, business and public services.”

Meanwhile, Julian David, chief executive at technology trade association TechUK, said: “By introducing a strategy on quantum, putting £900m into new UK computing capacity, accepting the recommendations of Sir Patrick Vallance on emerging technologies and providing new business incentives, the government has taken steps to advance the UK’s science and tech capabilities.

“The devil will be in the detail of these announcements. TechUK and its members will work closely with the government to build on these announcements and work to further progress the UK’s science and tech ambitions.”

Pushing boundaries 

Green noted that one of the most obvious insurance use cases for AI was chatbots and virtual assistants could help financial institutions offer personalised customer service in real-time.

“It could also help financial institutions discover fraudulent activities by analysing large amounts of data in real-time and identifying unusual behaviour trends,” Green continued.

“As such, this will help financial institutions make better and faster decisions by analysing facts and figures and providing insights into potential opportunities or risks.

“We expect that algorithms can help financial institutions make more informed trading decisions by more accurately assessing market reports and – therefore – predicting future trends and patterns.”

It’s also possible that AI will help finance companies adhere to “regulatory and reporting requirements by automating compliance processes” and identifying potential areas of non-compliance, noted Green.

He concluded: “By pushing the boundaries, improving efficiency, reducing costs and providing better services to their clients, I’m confident that AI will change the financial sector for the better in more ways than in most sectors.”