The recent wave of US tariffs has rippled across the insurance industry, sparking fears of rising costs, prolonged claims, and operational disruptions. Industry leaders are warning that the growing volatility in global trade policy is creating a storm of uncertainty that could reshape how insurance companies serve clients.
The claims sector, in particular, is vulnerable to global supply chain disruptions and material inflation that could drive up costs and slow down the resolution process. Pat Van Bakel (pictured), president, North America loss adjusted, Crawford & Company, told Insurance Business that while the full impact of tariffs is still evolving and uncertain, 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.
“While it may have been precipitated by certain decisions in the US administration, geographies around the world are contemplating their own responses. Tariffs will, without a doubt, be part of that equation, either as direct responses or as part of broader economic strategies. So, this is truly a global issue that we are actively monitoring.”
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.
This not only stretches the time it takes to close a claim but also burdens insurers with increased operational overhead. But the delays also carry cost implications beyond the physical rebuild.
Business interruption, temporary accommodations, and operational downtime become more costly with every extra day. This adds pressure on insurers to communicate clearly with clients about what to expect.
“In a commercial or industrial property loss, business interruption coverage hinges on how quickly the structure can be restored. Similarly, in auto or trucking claims, downtime can affect temporary living expenses, rental costs, and more,” said Van Bakel. “A claim that might’ve been resolved in six months could stretch to nine if material delays occur, significantly increasing total claim costs.”
For claims management companies, navigating these delays requires additional resources, coordination, and often, difficult conversations with policyholders.
The knock-on effect could be particularly stark following natural disasters, where timely repairs are critical to recovery. If the necessary building materials are delayed at ports or diverted due to supply shortages, delayed claims could lead to customer dissatisfaction and reputational risks for insurance companies.
“We’re always thinking about how to best serve customers in periods of volatility. In times like these, public perception of the insurance industry is often challenged,” said Van Bakel. “It’s essential that these external forces don’t erode the claims experience. Communication and transparency are key.”
Supply chain vulnerability isn’t new for insurers. The pandemic has already tested resilience, exposing weak points in logistics and inventory management. However, Van Bakel said the nature of the disruption is different this time.
"When you think about the pandemic versus the current volatility around tariffs, the pandemic was outside of the control of decision makers," he said. "Jurisdictions have levers they can pull and decisions they can make in response, and responses can vary significantly.”
What complicates matters further is the interplay between tariffs and foreign exchange. As countries respond to US trade measures, currencies fluctuate, which in turn affects claims.
"Globally, the supply chain trades in different currencies," Van Bakel said. "Where you may see an increase in the cost of a material or an input because of the tariffs that are getting applied, you may also see a relative decrease in the cost of that material or input because the currency is being devalued."
For now, the impact of tariffs on claims seems to be limited. Crawford & Company, for its part, is actively consulting with clients and industry leaders to prepare for what comes next. The firm 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. Right now, we are in more of a briefing stage than an active response phase.
“There are certainly many potential implications, and we’re monitoring those closely to help our customers navigate what are undoubtedly choppy economic waters.”
