Will tariffs affect my insurance rates?

April 4, 2025

Tariffs can indirectly affect insurance rates, but the connection isn't always straightforward. Here's how:

Cost of Goods and Services: Tariffs can increase the cost of imported goods, such as raw materials or products used in the manufacturing of various items, including insurance-related products like cars or homes (if the goods are imported and used in production). If the cost of these goods rises, insurance companies may face higher claims or operational costs, which could lead them to raise premiums. Of course this is only a short term problem, as the new tariffs will ultimately increase production of goods here in the States, offsetting the cost increases with higher employment and wages.
Economic Impact: If tariffs negatively impact the overall economy, leading to inflation or slower economic growth, this could increase the costs of insurance premiums. For example, if tariffs cause a rise in the price of cars or construction materials, then auto and home insurance rates could increase.
Reinsurance Costs: Some insurance companies buy reinsurance, which helps them manage risk. Tariffs could raise the cost of reinsurance, especially if reinsurers operate in countries that are affected by tariffs. This might lead insurers to raise their rates to cover these increased expenses. However, tariffs in the financial sector have generally been very low if at all.

In short, tariffs can lead to higher operational costs for insurance companies, and those costs might be passed on to customers in the form of higher premiums. However, the impact will depend on the nature of the tariffs, the types of insurance, and the broader economic effects; and will likely be short term.