Higher costs for imported materials such as automotive parts and construction supplies are pushing up claims expenses, which in turn may raise premiums for both personal and commercial policyholders.
This ripple effect, the report states, is also contributing to inflation and uncertainty in underwriting.
“Because tariffs create higher prices on imported goods, this has both direct and indirect impacts on the insurance ecosystem,” the American Agents Alliance stated. “For example, increased material costs can drive up the price of vehicle and home repairs, which may lead insurers to increase policy premiums to offset rising claims expenses.”
A week after announcing a new tariffs aimed at most American trade partners, President Trump posted on social media Wednesday that he’s placing a 90-day pause on those against 56 countries and the European Union.
However, he’s raising the tariff rate to “at least 145%,” effective immediately, on a critical trade partner for homebuilders; China.
Potential effects extend to commercial insurance as well. The report concludes that businesses relying on global supply chains may face elevated insured values as their production costs rise, necessitating policy adjustments and potentially trigger premium hikes.
“Tariffs can also drive up inflation in the overall economy, increasing labor costs across industries,” the Alliance noted. “This could cause higher rates in commercial property and homeowners lines.”
Agents are on the front lines of helping policyholders navigate this increasingly complex environment. Their role, according to the Alliance, involves more than just policy sales — it includes education, strategic planning, and advocacy.
“Many policyholders do not realize the connection between tariffs and insurance costs,” the Alliance said. “Proactively explaining and educating policyholders about the ways that global macroeconomic issues impact claims costs, and in turn, insurance premiums, is a best practice.”
Agents are encouraged in the report to review policies more frequently, not just at renewal time, and suggest adjustments based on rising material and labor costs. This might include verifying if coverage limits are sufficient, recommending higher deductibles to manage premium increases, or identifying coverage gaps that could be filled with endorsements.
Additionally, the Alliance emphasized the importance of agents advocating for clients in negotiations with insurers.
“By maintaining strong relationships with carrier partners and presenting solid risk profiles, agents can help policyholders secure more favorable terms,” the report said. “Agents can help negotiate renewal terms to keep premium costs down and provide insights and data-driven analytics to support the request for lower premiums.”