Blockchain may be finding its second wind in life and annuities

As artificial intelligence has blazed through the insurance industry, blockchain has remained on the edge of the action — promising transformation, delivering mostly proofs of concept and waiting for a real foothold. Today, that foothold may finally be taking shape through the practical pain points that life and annuity insurers face every day: fragmented data, slow beneficiary updates, managing annuity records and legacy systems that struggle under the weight of decades of customized code.

Two industry experts — Dan Garzella, CEO and founder of Avalon Risk Management, and Mark Nichols, financial services digital assets leader at Ernst & Young — offered a clear view into where blockchain is gaining traction, what remains aspirational and why the industry may soon see a more coordinated shift toward distributed ledger technologies. 

Where blockchain is being used today

Nichols said the most mature blockchain applications in life insurance and annuities focus on digital identity and related data infrastructure. “The use of blockchain across the insurance ecosystem has significant potential to drive efficiency, transparency and enhanced risk management,” he said, adding, “However, to date there has been limited-scale adoption, with more focus on proofs of concept and understanding the art of the possible.

“The most advanced examples we have observed involve digital identity for consumers and corporations, applied to use cases such as health records, birth and death notifications, and annuity transfers,” he said. Nichols also pointed to rising adoption in investment operations, where tokenized assets, stablecoins and tokenized deposits are emerging as tools for cash management, liquidity optimization and operational efficiency.

Although full‑scale blockchain deployments across policy administration remain rare, Garzella agreed that momentum is quietly building. “Some carriers plan to use private chains to track each policy and beneficiary change, including who approved it and when,” he said. “After migrations, this would cut down on back-and-forth over which record is current across teams and regions.”

Developing new use cases

Garzella described one pilot gaining attention: a shared, industrywide network that alerts insurers immediately when a policyholder’s death is officially recorded. “This would help companies find and pay families right away, which keeps them from getting in trouble for holding on to ‘lost’ policy money,” he explained.

Nichols sees opportunity elsewhere as well. 

“The ability to make annuity contracts more easily tradeable or to drive liquidity against the agreements, subject to appropriate legal frameworks, is key,” Nichols said. As annuities increasingly enter personal investment portfolios, tokenization and blockchain could become a natural part of how these products are bought, sold, administered and valued.

Both experts also highlighted the role of privacy‑enabled blockchains, which could allow consumers to authorize access to sensitive data while giving insurers a more secure mechanism for validation. Nichols cautioned, however, that widespread adoption will require greater comfort with crypto wallets, which remain unfamiliar to most consumers.

Policy life cycle management

Life and annuity insurers operate some of the most complex administrative systems in financial services. Decades of acquisitions, vendor transitions and product variations leave many companies with policy histories scattered across formats and platforms.

Garzella sees blockchain as a way to restore continuity. “Policies get lost when admin systems change and records scatter across vendors and subsidiaries,” he said. A shared ledger could serve as the unbroken thread, preserving policy history through migrations and restructuring.

Nichols added that digital identity frameworks built on blockchain could cut down on fraud, streamline beneficiary updates and reduce the administrative burden for consumers — if the privacy and wallet‑based infrastructure supporting them becomes robust enough to earn trust. 

“Digital identity is a key potential to unlock, but privacy infrastructure needs to evolve to support consumer trust and confidence in authorizing appropriate parties to access such records,” he said, adding, “Certain privacy-enabled blockchains show promise in enabling these capabilities and ultimately reducing both fraud and the administrative burden on the consumer. We also need to see greater adoption of wallets among consumers to enable these solutions to scale.”

Smart contracts and annuities

Annuities present a unique challenge: They can exist for decades, outlasting product teams, systems, documentation norms and even corporate ownership.

That is where Garzella sees smart contracts making a meaningful difference. “I’ve witnessed situations years later where no one could definitively identify what was agreed upon back then,” he said. Smart contracts, he said, are important in annuities, as they maintain the initial payout conditions despite any changes in the system.

Legacy systems ‘a key blocker’

If blockchain is the destination, legacy systems are the detours.

Garzella put it plainly: “Most old insurance systems bury policy rules in custom code and clunky batch jobs rather than clean data fields.” Extracting reliable historical data from these systems is labor-intensive and error‑prone, making blockchain integration “incredibly difficult,” he added.

Nichols agreed, calling legacy data “a key blocker” for widespread adoption. The firms making the most progress, he said, are those minimizing their reliance on legacy platforms altogether — rebuilding processes on modern architectures designed for interoperability.

Blockchain adoption isn’t only a question of technology. It’s a question of modernization. And modernization is expensive, slow and strategically disruptive.

Regulation and compliance

Regulators have not yet rewritten the compliance playbook for life and annuity products — and, for now, that impacts how insurers deploy blockchain.

Garzella noted that regulators still want traditional records preserved. That means blockchain is emerging primarily as a “tamper-proof audit trail,” not a legally authoritative system of record, he said.

Nichols pointed to cybersecurity and privacy as the “deepest areas of focus” among regulators. “Allowing highly personal information to be published on chain requires further maturity of the infrastructure to support it at scale,” he said.

The blockchain–AI partnership

As AI investment surges in the insurance industry, some wonder whether blockchain’s moment has passed. 

Garzella emphasized that AI is only as good as the data feeding it. “AI is a powerful engine for analyzing risk, but it is dangerous if it feeds on mismatched data,” he said. Blockchain, in his view, becomes the “trust layer,” ensuring data integrity so automation can operate safely.

Nichols sees a complementary future as well. “We see agentic commerce and AI‑enabled services being supported by blockchain infrastructure,” he said, noting that traceable, verifiable activity is essential for responsible AI deployment across underwriting, claims, fraud detection and customer engagement.

A slow shift

Neither expert suggested that life and annuity insurers are on the brink of a rapid blockchain overhaul. Instead, blockchain’s role appears to be shifting from experimental to structural — quietly addressing pain points that have lingered for years.

Across both sets of insights, a few points stand out.

» Blockchain’s value lies in reliability, not novelty.

» Digital identity and record accuracy are emerging as early winners.

» Legacy systems — not skepticism — are the biggest obstacle.

» Smart contracts could reshape annuity administration and liquidity.

» Privacy and regulatory frameworks remain essential prerequisites.

» AI’s rise is strengthening — not weakening — the case for blockchain.

As insurers modernize, consolidate and automate, blockchain may yet become a foundational tool. Today, it is waiting for the industry to catch up.

John Forcucci is InsuranceNewsNet editor-in-chief. He has had a long career in daily and weekly journalism. Contact him at johnf@innemail.