Trump’s tariffs pose inflation risk for insurers, Conning warns

By Mia MacGregor

Feb 21 - (The Insurer) – As the Trump administration doubles down on tariffs as a key economic strategy, insurers may face rising inflation-related challenges, particularly in claims costs, according to global investment management firm Conning.

Speaking at a presentation titled "A Good Year to Stay Flexible – Insurance Industry Outlook for 2025," Alan Dobbins, director of insurance research at Conning, warned that inflation remains a major concern for the property and casualty sector, particularly in areas like construction and vehicle repair.

"The primary concern is inflation and its effect on inputs to claim costs, specifically construction and vehicle repair," Dobbins said. "A meaningful amount of vehicle parts and new cars come from regions targeted by tariffs."

Dobbins said that the rising cost of new cars would inevitably increase the price of used vehicles, driving up replacement costs.

"If new cars become more expensive, that drives the price of used cars, which makes the replacement cost go up," he said.

"Vehicle repair costs, which skyrocketed in 2022, have since come down, but tariffs could tip things in a concerning direction again."

He also pointed out that projected claim costs will influence rate changes in lines of business that have already been stretched.

"Projected claim costs will factor into rate increases, particularly in lines of business like personal auto and homeowners insurance that have already experienced steep rate hikes in the past two years," Dobbins explained.

"This will further strain consumers, and similar dynamics apply on the property side as well."

Since taking office in January, President Donald Trump has announced plans for several new tariffs that could potentially disrupt long-standing trade relationships and heighten uncertainty in the global economy.

Last week, Trump announced plans to impose new tariffs, adding lumber and forest products to previously planned duties on imported cars, semiconductors and pharmaceuticals, as reported by Reuters.

"I'm going to be announcing tariffs on cars and semiconductors and chips and pharmaceuticals, drugs and pharmaceuticals and lumber, probably, and some other things over the next month or sooner," Trump said at a conference in Miami.

In early February, Trump unveiled plans for a 25% tariff on all U.S. steel and aluminum imports, effective March 12.

According to a February 1 statement from the White House, the president intends to apply an additional 25% tariff on imports from Canada and Mexico, as well as a 10% additional tariff on imports from China. Energy resources from Canada, however, will face a lower 10% tariff, according to the statement.