June 3, 2011 – The Wall Street Journal has published a series of articles in recent days about how some life insurers have failed to pay out death benefits in a timely fashion of late. A recent article, ”Life Insurers Skimp on Payouts: States,” contains the seemingly damning assertion that life insurance business units have failed to pay out death benefits for insureds where annuity business units have ceased making annuity payments for the same person. This does sound bad.

The fact is, however, that life insurance and annuity business units operate as separate profit centers within life insurers; they operate on different policy administration systems, which run in separate silos. Many insurers have a difficult time keeping track of their total risk exposure and relationship profile with a given client. That’s the IT side of it.

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