Minnesota insurance costs could continue to rise under new Trump tariffs

President Donald Trump is promising to unveil a new set of tariffs Wednesday on U.S. trading partners, in addition to auto tariffs already set to go into effect Thursday.

Tariffs are taxes on goods imported from other countries, but these new taxes are not just impacting the prices of our T-shirts and televisions. Tariffs may even lead to higher insurance rates here at home in Minnesota.

For more details, MPR News host Tom Crann spoke with Aaron Cocking, president and CEO of the Insurance Federation of Minnesota, a trade association representing property and casualty insurance companies in our state.

Press play above to listen to their conversation, or read a transcript below, edited for length and clarity.

A lot of people listening might be saying, 'Tariffs on cars I understand, but how could insurance go up?' So lay that out.

When you think about what insurance is and where those costs come from, any additional cost that's passed along in the form of claims to an insurance company is going to lead to higher premiums that insurers have to charge.

Remember, the money that insurers collect in the form of premiums is what's used to pay losses, and when the cost of these losses go up, for example, by the adding of tariffs to lumber or to vehicle parts, insurers have to price that into what they charge consumers for their insurance.

You're saying that the lumber, maybe the shingles, maybe the materials had tariffs on them. They're more expensive, so now the insurance company's going to have to lay out more money.

That's exactly right. You think about the majority of lumber in the United States is actually imported from Canada, and so those Canadian tariffs that come on, and you think about this in terms of where the insurance industry is at right now.

Last October, we had the hurricanes that hit coast the coastal Carolinas in Florida. A few months later, we had the fires in California. Both of those areas are in the midst of massive rebuilds right now, and then we've dumped tariffs on top of them.

So not only are we driving the price of lumber up because the demand is so much higher, now we're dumping tariffs on top of that already inflated demand.

You represent insurance companies and their interests here in Minnesota. So, what's on your mind as you see these tariffs coming down?

It is amplifying what some existing cost pressures already are. It's no surprise to anybody listening, I'm sure, that have seen this as they've opened up their renewals — whether it's for their homeowner's insurance or for their cars — that premiums are going up.

One of the things that we want to do is, how do we bend those cost curves down to save folks the premium that they're having to pay? And as we look at these tariffs, that adds in just another form of uncertainty or cost that insurers are having to deal with to make sure that they have a viable product.

A lot of people might think, 'Well, insurance companies aren't going out of business anytime soon. They make profits. Can they just have a little less profit and not necessarily always pass the cost on to me, the consumer?'

There was a New York Times article that ran last May that did a state-by-state breakdown. In Minnesota, insurers paid out more in claims than they collected in premiums in each of the last five years. The notion that insurers are making profit in the realm of homeowner's insurance or the realm of auto insurance is just not supported by the facts.

The number of claims and what insurers are paying out in claims costs, both for homeowners and for auto the last five, six years has been incredible, and these premium increases are the result of insurers trying to get to the point where they're collecting enough premium to pay out what they're seeing in losses.