Global insurance at risk as US tariffs expand
Joy Agwunobi
Experts have warned that the sweeping tariffs introduced by the U.S President Donald Trump could drive up insurance premiums for businesses and individuals worldwide, as claims costs are expected to rise sharply across several key sectors.
Trump recently unveiled a new round of tariffs targeting a broad spectrum of imports from the United States’ key trading partners. Justifying the move, he argued that such measures are necessary to reverse the country’s economic decline caused by low-cost foreign goods, which he claims have undermined American industry for decades.
However, insurance experts warn that beyond trade and economics, these tariffs could have unintended consequences on the global insurance sector.
Alex Bertolotti, head of insurance at PwC UK, stated that the tariffs are likely to impact the global specialty insurance market significantly, especially in London, which remains a leading hub for underwriting high-risk and complex insurance products. These policies cover areas such as marine cargo, aviation, satellite operations, and cyber threats industries heavily dependent on global supply chains and international trade.
“Introducing these tariffs will increase claims costs for insurers. This will place upward pressure on premium rates for specialist policies, likely driving up the cost of insurance for global businesses that depend on them,” Bertolotti noted.
He explained that tariffs on goods and components could make it more expensive to repair or replace damaged items—particularly in lines of insurance like marine hulls, manufacturing breakdown, and logistics and cargo coverage. This could force insurers to raise premiums to offset their rising liabilities.
In addition to claims costs, Bertolotti highlighted other areas of concern. He warned that Business Interruption (BI) policies could face increased claim activity as global supply chains are disrupted by tariff-induced delays. Likewise, trade credit insurance, which protects businesses against non-payment—could see heightened risks as overseas buyers grapple with the financial strain of higher import costs.
He added that retaliatory trade measures by other nations could also increase demand on political risk insurance, especially if rising trade tensions lead to policy changes or asset seizures in affected countries.
Adding to these concerns, Mohammad Khan, head of general insurance at PwC UK, pointed out that the UK’s dependency on imported goods for vehicle and property repairs makes the insurance sector particularly vulnerable.
According to Khan, a large percentage of the parts used to repair damaged vehicles in the UK are sourced from international markets, including the United States, China, and the European Union. The introduction of new tariffs on imports from these regions is expected to push up the cost of replacement parts, which in turn will likely inflate the cost of vehicle repairs and ultimately drive up insurance premiums.
“Higher prices for imported auto components will feed directly into repair bills,” he said, noting that auto insurance premiums are expected to rise as insurers adjust to the increased expenses. But the effects will not stop there. Khan added that homeowners and commercial property owners may also see their insurance rates climb.
He explained that any delays or disruptions in sourcing parts—whether for cars or buildings—lead to longer repair timelines, which escalate the total cost of claims. “The more time it takes to carry out repairs, the more expensive the claims process becomes,” Khan said. “And tariffs tend to introduce delays in supply chains, both due to administrative burdens and actual import slowdowns.”
Another critical point raised by Khan is the lack of preparation time the insurance industry has had to absorb this change. With the 10 per cent blanket tariffs on most goods entering the U.S. set to begin on April 5, and more stringent levies scheduled for April 9, insurers have had very little opportunity to mitigate the impact, such as by stockpiling spare parts.
“Unlike previous trade disruptions like Brexit, where businesses had time to plan, this round of tariffs has been introduced with virtually no notice,” he emphasised, adding that “the absence of buffer time means insurers are going to feel the impact far more quickly.”
He also drew attention to the particular vulnerability of electric vehicles (EVs). “Electric cars are especially at risk,” Khan said, “because they rely on a greater number of high-value imported components, many of which are already expensive. Any additional tariff-related cost will only make them more costly to insure.”
Beyond automobiles, Khan highlighted that property insurance will also feel the ripple effects. Construction materials like steel and timber, which are heavily used in rebuilding efforts following natural disasters or structural damage, are among the products facing increased import duties.
“These tariffs could make it significantly more expensive to repair or reconstruct buildings affected by events like floods, fires, or storms,” he said. “And as rebuilding costs rise, so too will insurance premiums for both homes and commercial properties.”
Khan warned that unless these tariffs are revised or insurers are given time to adapt, businesses and consumers alike should prepare for broader financial strain across various insurance lines from cars to commercial properties.