In Focus: What do Trump’s tariffs mean for UK insurance claims?

Businessman Donald Trump has earned himself the label of ‘tariff man’ since his US election victory in November 2024.

Within his first 100 days, the newly re-elected president imposed a range of additional trading tariffs under the country’s Tariff Act, including a 25% import tax on all steel and aluminium and 25% tariffs on cars and car parts across the world.

He also implemented tariffs of up to 145% on Chinese goods and later introduced a 10% tax on goods from a range of countries – including the UK.

These global tariffs have led to concerns about price increases and supply chain delays across a wide range of industries, including insurance.

According to Visual Capitalist, the average US tariff rate in 2024 was 2.5% – this shot up to 14.5% for 2025.

Mike Latham, chief executive at Verlingue UK, told Insurance Times: “The UK businesses that are exporting to America, if the goods originally emanate from China, then those goods are going to be hit by 146% tariffs. For example, a couple of significant clothing brands that we look after.

“It is going to make America an impossible market for them and to the point where they will have stock in the US that they can’t sell because they will [have to] sell it at a significant loss. There are expensive consequences that we need to look out for.”

Claims costs

Within the world of insurance, one of the key concerns arising from Trump’s tariffs is the possible impact on claims costs.

Claims costs are already high as it is – for example, the ABI reported in February 2025 that UK motor insurers paid out a record £11.7bn in claims in 2024 as vehicle repair costs surged.

The data found that these insurers dealt with 2.4 million motor insurance claims last year, with payouts 17% higher compared to 2023.

Furthermore, the ABI’s figures also showed that the average private motor insurance claim rose 13% versus 2023 to £4,900. In the final quarter of 2024, the average motor claim hit £5,300 – an all-time high.

Broker Marsh said that tariffs on imports – including many auto parts, machinery and construction supplies – are likely to lead to higher repair and replacement costs and that “these higher prices will likely increase claims estimates provided to insurers”.

Elizabeth Wooliston, underwriting director at the Lloyd’s Market Association, added that if tariffs make goods and spare parts more expensive, insurance claims will in all likelihood rise.

And Alex Bertolotti, head of insurance at PricewaterhouseCoopers (PWC) UK, said: “We believe that the introduction of tariffs will increase the cost of claims, particularly in motor and home.

“As these tariffs have come around with little warning, insurers have not had time to stockpile goods such as car parts, which would have been one way of delaying the impact on insurance costs.

“This means the impact of these tariffs will likely be felt much sooner than, for example, following Brexit, which the industry had more time to plan for.”

Premium rises?

If claims costs are going to increase further as a result of Trump’s tariffs, it is likely that premiums are going to have to increase as well if insurance firms are going to maintain profitability.

Premiums in the motor market have been improving for policyholders in recent times, with data from Confused.com and WTW published in March 2025 showing that UK motorists are paying £777 on average for premiums, down from £941 a year ago.

This drop represents the biggest annual decrease in motor premiums since 2014, continuing a downward trend that began in Q1 2024.

However, due to the new tariffs, Wooliston said: “Premiums may have to increase or cover may be decreased, otherwise insurers could face a significant potential margin squeeze.”

Marsh added that higher repair and replacement costs could mean that the current valuations on which insurance limits and claims recovery plans are calculated are no longer accurate, “leaving insureds exposed to unexpected costs in the event of a loss”.

Mohammad Khan, PWC UK’s head of general insurance, said: “Claims costs are likely to rise, which may reverse the recent reductions we’ve seen in motor and home insurance prices.

“The UK imports most of the parts we use to repair damaged cars, so an increase in the cost of these parts from the US, China and European Union (EU) would drive up repair costs, making insurance more expensive.”

Uncertainty ahead

So, if Trump’s tariffs present a risk to claims costs in the insurance market, all the good work to bring premiums down could be undone.

Latham said that these changes signal “a time of uncertainty and people don’t care for uncertainty”. Biba chief executive Graeme Trudgill agreed that brokers and clients like stability, but “there’s a lot of moving parts with the things that are coming out of America”.

He added that “we’re all one big ecosystem” and that “if certain parts of the economy are affected, that’s something we’d have to react to”.

He continued: “We’ve been in discussion with HM Treasury and our members to try and pinpoint what the principal concerns are and it’s a moving feat where tariffs come and go and what might the long term look like.

“Clearly there is some concerns over the cost of materials, over some business that may pause trade with America.”

However, Trudgill noted that the US and UK still want their “special relationship” to last.

He said: “I spoke to a member of the House of Representatives who had chaired its equivalent of the Treasury Committee.

“I talked about the special relationship – is that still in place with America?

“And he said it was, we’re right up there and that it is important to the US, which is good to hear.”