Allstate and IBM are showing that quantum computing has the potential to help build better portfolios of risk and value, and solve hard problems in the insurance industry.
The joint work, published to arXiv in May 2026, addresses the “knapsack problem” from computer science, which has important implications for insurance companies. The knapsack involves finding the best possible combination of items to fill a container without exceeding its weight limit. In the classic knapsack problem, you’re given a group of items with different weights and values, and try to fill the bag with the most valuable possible collection of items without going over the weight limit. Many formulations of the knapsack problem have no practical solution in classical computing, particularly when the number of items gets very large.
The knapsack problem has direct application to insurance portfolios: Insurance companies aim to build balanced portfolios that meet customers’ needs while managing risk responsibly.
The realities of home insurance make balancing risk more complex. Risks are often connected in ways that are hard to predict. If a tornado impacts a community, a home insurer may end up paying to replace your house, your neighbor’s house, and every building in the area.
