How will Trump tariffs, other policies impact the insurance industry?

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By Doug Bailey

The insurance industry, already girding for the impact President Trump’s tariffs will bring to its business, is facing even broader repercussions from the administration’s policies well beyond what tariffs could bear.

Auto, home, health, and life insurance are all likely to be affected by the shifting policies, raising prices for consumers and eating into profits for the companies.

“The president’s every action, from tariff threats to targeting immigrant workers, is setting off actuarial alarm bells,” says Rep. Jake Auchincloss, (D-Mass.).

Writing in an opinion column for MSNBC.com, Auchincloss warned that tariffs will bring costly surges to auto insurance but the administration’s use of the legal system and expansion of the roles and responsibilities of the uninsured will raise costs across the board.

Because homes and cars are “bundles of lumber, steel, aluminum, and semiconductors,” the president’s plans to tax all those materials at double-digit rates will spur inflation that will course through repair or replace costs for autos.

“Notably quite the opposite of Trump’s campaign promise to cut auto insurance premiums in half,” Auchincloss said.

Home insurance may be hit by tariffs

But it won’t stop with autos. Home insurance may be even more sensitive to the president’s agenda, said Auchincloss, who was an executive at Liberty Mutual where he led product development before running for Congress. Because nearly 15% of the total U.S. imports are in construction-related goods (Canada alone accounts for 50% of wood imports) the material costs of home construction and repairs will surge along with labor costs.

“The construction industry has the highest percentage of undocumented workers of any sector,” the Congressman said. “Whether through deportation or fear, its labor force participation is likely to decline. That will spike homebuilding costs everywhere.”

Health insurance costs might spike, as well.

“Trump and congressional Republicans appear intent on axing Medicaid, which insures children, the poor and the elderly,” Auchincloss said. “The uninsured still get sick, though. Lacking access to preventive care, they may get sicker faster. When they do, they go to emergency rooms, where hospitals foot the bill.”

Market downturn likely to impact earnings

The insurance companies won’t get a pass, he said. Since most insurers make the bulk of their profits through investing, the turndown in the markets is likely to impact earnings.

“Those returns are a function of interest rates and asset management, not underwriting,” Auchincloss said.

The industry got some fairly good news with the Consumer Price Index February numbers out this week. But analysts said there’s less optimistic information in the fine print.

“While we may have seen a slower rate of inflation in February, price pressures have the potential to remain sticky from here,” said David Seider, chief commercial Officer at The Zebra, an online insurance comparison service. “Today’s report shows auto insurance rates up 11.1% annually and are expected to rise further when considering tariffs impacting the auto industry.”

Seider said some car dealerships have already begun “front-running” tariffs and preemptively raising prices.

“If the price of materials, and new and used vehicles continues to rise, so will the price of auto insurance,” he said.

As for insurance carriers, he said, some of the leading brands are in a much healthier position than they were a few years ago.

“Years of increasing rates has brought stability and profitability back to their books,” he said. “So, some of them may be able to ‘wait and see’ when tariffs go into place and won't be forced to preemptively increase rates. All that being said, if tariffs are here to stay, they will adjust their pricing to match.”