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Insurance industry adjusts to tariffs and trade wars

We are entering a higher cost operating environment for most industries.

By Jonathan Todd and Phil Nester | March 26, 2025 at 11:27 AM
New tariffs mean any item may have higher market value, replacement value, manufacturing cost and even repair cost. It follows that insurers are incorporating geopolitical risk scores and supply chain exposure metrics into their underwriting models, particularly for industries that are heavily reliant on international trade. (Credit: DigitalArt Max/AdobeStock)

The White House has kicked off the early stages of a global trade war.

The near-term net effect is the growing reality that we are entering a higher cost operating environment for most industries. Volatility is always a challenge for commercial interests. Now, the more acute near-term challenge for the insurance sector is accommodating the dramatic linear trendline in costs of tangible goods throughout the supply chain and navigating uncertainty in the global economy created by shifting trade policies. These emerging scenarios are putting downward pressure on capital commitments and delaying critical underwriting decisions in multinational and trade-dependent lines of business.

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