J.P. Morgan recently examined how US tariffs could affect the insurance sector. The analysis shows that personal lines insurers, such as those offering auto and home insurance, face higher direct risks than commercial insurers or reinsurers.
Tariffs have raised the costs of auto parts, vehicles, and building materials. These inputs are central to underwriting in personal lines, making firms like Allstate and Progressive more exposed.
Higher repair costs and rising used car prices are expected to narrow their profit margins.
Commercial insurers face different risks and often operate with broader geographic exposure, making them less sensitive to tariff-driven price increases. Reinsurers also encounter some pressure from rising material costs but remain less directly affected than personal lines carriers.
Auto insurance premiums in the U.S. could rise 14% by the end of 2025 due to new tariffs on imported vehicles and parts.
The expected increase in claims costs—estimated between $26bn and $52bn—reflects rising repair prices, new car costs, and pressure on used car markets. Insurers are already responding with higher rates and cost controls, but face limits to further efficiency gains.
Additional tariffs on goods from China, Canada, and Mexico may push premium increases to 19%. As market leaders assess the impact, policyholders should expect continued volatility and limited room for rate relief in the near term.
U.S. auto insurance premiums could increase 14% on average by year-end due to new tariffs on imported vehicles and parts, according to US Auto Insurance Rates by States.
Insurers estimate the annual personal auto claims cost may grow by $26bn to $52bn. The 25% tariffs on imported passenger vehicles and light trucks take effect on April 3, and on key parts by May 3.
Economists expect these import levies to raise new car prices significantly, due to low profit margins and interconnected global supply chains.
Life insurers appear more insulated from immediate effects, though extended trade tensions may still present challenges.
A downturn in equity markets, interest rate shifts, or foreign exchange volatility could hurt insurers with large equity-linked portfolios.
At the same time, insurers with a focus on interest rate-sensitive lines could benefit if credit spreads widen and yields rise.
J.P. Morgan also evaluated how brokers in the property and casualty segment might respond. While slower economic growth could weigh on business activity, inflation from tariffs may drive up premiums, particularly in reinsurance. This pricing trend could create new opportunities in the commercial market.
Overall, the report concludes that personal lines insurers hold the highest direct exposure to tariff impacts. In contrast, life insurers and brokers face indirect effects tied to market performance and pricing conditions.
J.P. Morgan stresses the need to assess both immediate and secondary risks across insurance segments as trade policy shifts.
