Legal & General Reinsurance (L&G) has launched what it claims is the UK's first pension risk transfer (PRT) execution platform to be driven by blockchain technology.
Known as ‘Estua-Re', the technology aims to provide a "single ecosystem capable of driving every stage of the PRT reinsurance value chain". This could include pricing, claims handling, financial reporting, and collateral, the firm said.
Blockchain, also known as distributed ledger technology, allows connected parties to instantaneously share relevant information via a secure network and - in L&G's scenario - reduce duplication of processes during reinsurance transactions.
L&G said Estua-Re will be both more efficient, cheaper and more secure than traditional reinsurance processes, with the platform "redefining the way long-term life reinsurance business is sold and managed". The reinsurer added the time and cost savings will benefit the individual pensioners covered by reinsurance deals.
The set-up will allow multiple parties to transact with each other without needing an intermediary, while greater transparency can be achieved through all parties retaining an up-to-date copy of the ledger database.
Customers of L&G's reinsurance business will be gradually moved over to the platform, which has been developed using Amazon Web Services (AWS).
L&G Reinsurance chief executive Thomas Olunloyo said Estua-Re was "an exciting milestone in the deployment of blockchain in the long-term reinsurance space".
"Using AWS, we have been able to create a solution that addresses not only the greater speeds at which risks are transacted, but also drives transparency and security in an increasingly interconnected market," he added.
"We believe that blockchain is uniquely suited to the long-term nature of annuities business as it 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."
Amazon Managed Blockchain general manager Rahul Pathak added the innovation was "exciting" and enabled L&G Re customers to take advantage of the "security and scalability" offered.
It is not the first time that blockchain has been deployed in the pensions sector. Last year, KAS Bank launched Voteroom which utilises blockchain to boost the efficiency and transparency of voting at shareholder meetings.
Pensions Administration Standards Association president Margaret Snowdon has also argued the technology could be used to help combat cyber-crime and scams, as well as to ensure consistency of documents and scheme knowledge across individual funds' advisers.
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