Nested Stochastics from Quantum Computers

The valuation of life insurance liabilities via cashflow projections is inherently of nested stochastic nature. In particular, in any fully nested stochastic simulation, the value at each node in time beyond the initial depends on both the value of the parent node as well as the value of all subsequent nodes.

Since such a fully nested computation is not feasible, one typically reverts to various approximations methods to obtain a first estimate, e.g. a deterministic certainty-equivalent path, a split of the full scenario paths into real-world short-term shocks and risk-neutral long-term shocks used to discount the former etc.

However, while all these approximations allow for a first estimate of the full liabilities, they remain exactly that: An approximation without any possibility to gauge how close they truly come to the real answer.

The underlying problem is that any state-of-the-art simulation first computes the random numbers to be translated into scenario paths and then must attempt to link together the simulated values to recreate their inter-dependency imposed by their nesticity. For the purpose of computing fully nested liabilities, any such algorithm, however sophisticated, is doomed to fail.

On the other hand, if one could impose the correct inter-dependency before the actual simulation of the random numbers, the resulting scenario paths are nested stochastic by default. It is exactly this feature which quantum computers provide, but classical computers cannot. The physical phenomenon enabling this feature of relationship-imposition before specific number-allocation is called superposition of the qubits (quantum bits).  

While at this point quantum computing based life insurance liability valuations remain in pre-prototype mode, they have the potential to replace many (if not all) life modelling approaches once the technology becomes more commercially viable.

When will this happen?
Well, the exact timeline remains elusive, but it is best to plan for sooner than later.

How could a quantum computing based nested stochastic valuation be sketched out?