As the United States imposes higher tariffs on key imports, the resulting financial strain is driving up demand for trade credit insurance and altering the risk landscape for insurers.
The cascading effects are prompting industry analysts, including AM Best, to examine how carriers might respond to growing economic and claims pressure
With US tariffs now reaching as high as 145% on certain Chinese imports, businesses engaged in international trade are facing tighter margins, payment delays, and increased exposure to nonpayment risks.
Hub International, a global insurance brokerage, reports that more companies are turning to trade credit insurance as a financial safeguard, especially as lenders are expected to tighten credit terms and may require such coverage for foreign receivables.
This surge in demand may lead to capacity issues for insurers. Hub cautioned that if buyer credit strength continues to weaken while coverage demand rises, carriers could struggle to meet the volume of new policy requests.
AM Best has flagged the growing complexity of underwriting in this climate, noting that higher credit risk and macroeconomic uncertainty could impact insurers’ balance sheets and reserve adequacy.
The broader economic environment is also under pressure. Allianz said that the US has entered what it describes as a full-scale trade war, with an average global tariff rate now at 25.5%—a level not seen since the 1890s. Tariffs on Chinese imports stand at 130%, while European goods face 9% on average, excluding sectors like semiconductors and pharmaceuticals.
Legal professionals are assessing the insurance implications of trade-related disruptions. According to Pillsbury Law’s Jeff Kiburtz and Lisseth Ochoa-Chavarria, several lines of coverage may be affected, including political risk, directors and officers liability, builder’s risk, subcontractor default, and marine insurance. Although tariffs do not cause physical damage, the financial and operational fallout may lead to claims under these policies.
The American Property Casualty Insurance Association has also warned that construction and personal auto insurance—currently the largest US property-casualty line at roughly one-third of total premiums—could see a rise in claims costs.
AM Best echoed these concerns in a recent commentary, linking inflationary pressure from tariffs to rising claims severity and underwriting challenges.
Allianz projects that average US tariffs may decline to 10.2% by the fourth quarter, contingent on successful bilateral trade agreements. Until then, auto, parts, steel, and aluminum tariffs remain in effect for China, Mexico, and Canada, despite a temporary 90-day pause on other new duties.
AM Best director Ann Modica noted that extended uncertainty could translate into long-term risk perception changes, potentially impacting market stability.
Allianz further forecasts a 2.3% global GDP growth rate this year, with US insolvencies projected to rise by 16%, and global insolvencies by 7%. It also anticipates US inflation will peak at 4.3% by summer, a divergence from European disinflation that may lead to different monetary policy paths.
PwC US recently advised insurers to stress-test their portfolios and prepare for medium- to long-term implications of tariffs and inflation by adjusting underwriting models and pricing strategies.
What impact do you foresee these trade developments having on insurance pricing, claims, and credit markets? Share your views in the comments.
