British insurer Legal & General (L&G) has teamed up with Amazon to establish what is reportedly the first blockchain system for corporate pension deals, according to a June 12th report by Reuters.
The insurer said it would use a managed blockchain system launched by Amazon Web Services (AWS) to handle bulk annuities, which involve Legal & General taking over companies’ defined benefit or final salary pension schemes.
Thomas Olunloyo, CEO of Legal & General Reinsurance, expressed confidence in blockchain technology, explaining that a distributed ledger suits “the long-term nature of annuities business.”
“[Blockchain] allows data and transactions to be signed, recorded and maintained in a permanent and secure nature over the lifetime of these contracts, which can span over 50 years,” Olunloyo said.
Blockchain technology was originally conceived 10 years ago as the basis for the cryptocurrency Bitcoin. It is a shared database that can securely process and settle transactions without the need for third-party checks.
L&G is only launching the blockchain platform for bulk annuity business outside its core markets of Britain and the United States, although an L&G spokesperson said the platform could be extended to the two markets in the future.
Banks and other financial firms have invested millions of dollars in blockchain systems to cut costs and the complexity of unwieldy back- and mid-office processes.
Expectations for the technology in the insurance sector fall in line with those in the wider corporate world. Blockchain’s potential to reduce costs and maximize efficiency has been lauded over the past decade, but very few significant brands have made notable progress when it comes to adopting the technology.
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