Global trade fragmentation set to affect insurance costs and coverage, report finds

Jennifer Johnson ; 2025-12-10 22:06:05

Insurers urged to adapt their strategies

Insurance News

By Josh Recamara

Dec 03, 2025Share

The US effective tariff rate of 15% could reduce global property and casualty (P&C) premium growth by 0.7 percentage points and life premium growth by 1.2 percentage points between 2025 and 2027, compared with 2024 levels, an analysis shows.

Brokerslink's report, produced by the Swiss Re Institute, highlights the insurance implications of rising trade tensions and geoeconomic fragmentation.

Claims impact in the US

Tariffs are expected to raise import prices for non-exempt goods, including commodities and intermediate goods, which feed into local supply chains. Higher inflation will increase claims severity as insured assets become more expensive to repair or replace.

Swiss Re Institute forecast a 2.4-percentage-point rise in P&C claim payouts in the US between 2025 and 2027. Property claims are projected to rise by roughly 8.9% and motor physical/own-damage claims by over seven percentage points due to higher vehicle and spare part costs. Lines covering services (D&O, C&S) and income compensation (motor/general liability) are likely less affected, while the impact on health insurance remains uncertain, though skewed toward adverse outcomes.

Claims impact in the rest of the world

Outside the US, absent significant retaliation, tariffs are expected to have limited direct impact on inflation and claims severity.

Some countries may even experience disinflation due to currency appreciation against the US dollar, a global economic slowdown, and partial re-routing of trade to cheaper sources. Country-specific factors, however, will still drive claims trends.

In Germany, for instance, large fiscal spending is projected to boost construction activity, raising construction costs and resulting in an estimated 1.2-percentage-point impact on property claims payout growth between 2025 and 2027. Construction cost inflation in Germany is also expected to remain above headline CPI, keeping property insurance claims elevated.

Long-term implications and growth opportunities

Rising geoeconomic fragmentation could limit international risk diversification, push up insurance costs, and make peak risks harder to insure. Reduced global cooperation on climate, pandemic, and cyber risks may widen protection gaps, leaving insurers and clients with higher exposures.

Meanwhile, heightened uncertainty is increasing demand for protection, particularly in cyber, which is forecast for double-digit growth amid growing digital exposure and AI adoption. Re-industrialization and the energy transition are expected to generate additional demand for commercial and specialty insurance solutions.

José Manuel Fonseca (pictured), Brokerslink president and CEO, said the findings underline the need for insurers and brokers to adapt risk strategies, price products appropriately, and capitalize on emerging opportunities in an increasingly fractured global market.