Magazine article American Banker

Terror Attacks Highlight Reasons Why Banks Should Sell Insurance

Magazine article American Banker

Terror Attacks Highlight Reasons Why Banks Should Sell Insurance

Article excerpt

After the terrorist attacks, a journalist told me that several bankers are shelving their plans to start insurance sales programs. What a mistake this is

There was reason enough for banks to sell insurance before Sept. 11. Not only do banks need to offset the shrinkage of net interest margins, augment revenue streams, replace lost investment sales, and improve the bottom line, but millions of American families and small businesses remain uninsured or significantly underinsured.

More than 40% of Americans and 26% of U.S. households have no life insurance coverage whatsoever. For those who do, the median amount is a meager $30,000.

Terrorism underscores the importance of insurance. Fox News has reported that among the families of the more than 730 Cantor Fitzgerald employees who were killed in the World Trade Center, 1,000 children lost at least one parent. How terrible it is to hear the media refer to "widows and orphans," since so many had dismissed the insurance industry's use of the phrase as anachronistic.

Reports like this should shake the complacency of those who have said that insuring against death and disability is no longer necessary; that it is not in fashion; that people are not motivated by such concerns.

The idea that people need not protect themselves with insurance, but need only accumulate assets by investing in the stock market, annuities, mutual funds, and 401(k) programs, was bad advice before Sept. 11. How bad it was is more obvious today.

Decades ago Solomon Huebner, a scholar of insurance at the University of Pennsylvania's Wharton School, wrote:

"Property values, in fact, are the result of human effort. Were it not for the life value, there would be no property value at all. The human life value is the cause and not the effect, the permanent performer of service and not the temporary product. …

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