Hinshaw's Seaman: Trump administration set to end ESG pressure on insurers

By George Abbott

Jan 29 - (The Insurer) - The US insurance industry is expected to stop acting as an unofficial ESG "enforcement arm" under the second Trump administration, according to Scott Seaman, Insurance Industry Group Leader at Hinshaw & Culbertson.

In an interview with The Insurer TV, Seaman said insurers will face less pressure to withdraw from underwriting and investing in fossil fuel projects following Trump's election as president for the second time.

“I think the Biden rule that allowed the consideration of other factors, like ESG, in addition to return on investment, is going to disappear under the Trump administration,” Seaman said. “And I don't think we're ever going to see the final SEC rule on climate disclosure go into effect.”

“On balance, there will be less pressure on insurers to avoid underwriting fossil fuel companies,” he concluded.

Tort reform: no major changes expected under Trump

Seaman does not expect the Trump presidency to address escalating liability costs with tort reform.

Over the past five years, US commercial casualty insurance losses have grown at an annual rate of 11 percent, reaching $143 billion in 2023 — surpassing global natural catastrophe losses of $108 billion, according to Swiss Re’s November 2024 Sigma report.

However, Seaman made it clear that he does not expect meaningful changes at the federal level to help address this.

from https://www.theinsurer.com/tv/news-in-focus/the-trump-administration-and-its-impact-on-social-inflation/

“If you're relying on federal law for tort reform, you're looking for love in all the wrong places,” he said, pointing out that most meaningful tort reform occurs at the state level rather than through federal legislation.

That said, Seaman noted that Trump’s broader macroeconomic policies could help ease some of the factors fuelling large settlements.

“I think anything that Trump’s macroeconomic policies do to reduce inflation will be favourable to insurers,” he said. “It’s going to lower the cost of doing business for insurers, like all businesses, but it’s also going to lower claims costs.”

He explained that escalating costs have been a key driver of social inflation: “Jurors become pre-conditioned to factor in inflation and higher costs in their verdicts,” he said.

However, Seaman warned that social inflation will take time to decline, even in a deflationary environment.

“The old Keynesian motto was that wages and prices are sticky in a downward direction, and I think the same may be true of some nuclear verdicts,” he said.

Watch the full interview to hear more about:

How AI will impact insurers

What the reductions of "greenflation" means for insurers

Seaman's view on the California wildfires