The recent wave of US tariffs has sent shockwaves through the insurance industry, sparking concerns about rising costs, prolonged claims, and operational disruptions. Industry leaders warn that the growing volatility in global trade policy is creating uncertainty that could reshape how insurance companies serve clients.
Impact on Claims Management
The claims sector is particularly vulnerable to global supply chain disruptions and material inflation, which could drive up costs and slow down the resolution process. Pat Van Bakel, President of North America Loss Adjusting at Crawford & Company, noted that while the full impact of tariffs is still evolving, the industry should not underestimate the consequences on claims services.
“Most of the conversations up until this point have largely focused on US tariffs, but the reality is that this is not just a US or North American issue,” Van Bakel said. “Tariffs will, without a doubt, be part of that equation, either as direct responses or as part of broader economic strategies.”
Rising Costs and Delays
Many goods affected by US tariffs, including lumber, steel, vehicle parts, and electronics, are integral to insurance claim resolution, particularly in property and auto insurance. When these materials are delayed due to border bottlenecks or become costlier due to added tariffs, insurers face longer claim cycles and higher replacement costs.
“In a commercial or industrial property loss, business interruption coverage hinges on how quickly the structure can be restored,” Van Bakel explained. “A claim that might’ve been resolved in six months could stretch to nine if material delays occur, significantly increasing total claim costs.”
Supply Chain Vulnerability
Supply chain vulnerability isn’t new for insurers, having been tested during the pandemic. However, Van Bakel noted that the nature of the current disruption is different. “When you think about the pandemic versus the current volatility around tariffs, the pandemic was outside of the control of decision makers,” he said.
The interplay between tariffs and foreign exchange further complicates matters. As countries respond to US trade measures, currencies fluctuate, affecting claims. Crawford & Company is actively consulting with clients and industry leaders to prepare for what comes next, having recently hosted a roundtable with chief claims officers in the US to discuss trade tensions and their downstream effects.
“We’re still very early in understanding the full implications,” Van Bakel said. “It’s a bit of a moving target. Tariff-related decisions are still evolving in many jurisdictions, so any ultimate impact remains to be seen.”
