Fitch: Credit trends for US insurers likely strained by tariffs

By Isha Marathe

April 29 - (The Insurer) - Though U.S. insurers are not directly affected by tariffs, they are exposed to second-order effects of market volatility and will likely see their credit trends pressured in 2025 as the outlook for trade, economic growth and inflation worsens, Fitch Ratings said.

Property and casualty insurers are likely to face cost inflation in personal auto and homeowners lines as a result of the tariffs.

"We are monitoring the inflationary effects on loss costs, reserve adequacy and margins if tariffs cause loss costs to exceed rate increases," Fitch said.

"Other watch items include increased severity of claims pressuring margins, and the effect of market volatility and potential losses on equity portfolios."

Weakening global growth as a result of escalating trade wars may pressure insurers’ investment and underwriting results as volatile equity prices, widening credit spreads and rising defaults may lead to mark-to-market losses, Fitch said.

Earlier in April, Morningstar DBRS said that it expects U.S. and Canadian auto and property insurers to see claims cost pressures related to car prices, car repair costs and expenses associated with rebuilding materials as a result of the trade war.

Morningstar DBRS added that reinsurers are also likely to be "mildly affected" by the market volatility.