Page 51 - The Insurance Times September 2025

Global Tariff War

Reinsuring against a Raging Global Tariff War

E ven as the global reinsurance sector was reeling from age limits on existing policies. Apart from the resulting
higher insurance premiums, insurers will also have to ac-
the impact of the higher tari s announced by the US
on imports from 57 countries in early April, the flare-up of count for the increasing complexities and regulatory risks in
the Israel-Iran conflict and the devastating Air India plane public sector projects, ultimately forcing them to review and
crash have put additional pressures on the business. While adjust their underwriting policies across most insurance seg-
the world's leading economy has since paused its 'recipro- ments.
cal tari s' and continues to engage in talks with trading
partners, economists have been warning of rising recession Pricing Strategies
risks, which could derail global demand forecasts amidst ris- As the cost of capital goods and services spirals upwards due
ing cost escalations. to the tari war, global reinsurers will have to adjust their

premium pricing models for the automotive, property and
On account of the heightened geopolitical uncertainties, casualty reinsurance segments, among others. Additionally,
global businesses are already witnessing order cancellations, the fatal Air India plane crash has compelled reinsurers to
piling inventory and heightened credit default risks; espe- re-evaluate risks associated with wide-body aircraft models
cially a ected are those that rely on imported goods origi- like the Boeing 787-8 Dreamliner; this would harden the
nating from conflict-ridden regions. As a result, insurance aviation reinsurance market and lead to stricter terms.
companies could see higher claim costs across lines, com-
pelling reinsurance companies to recalibrate their underwrit- From an operational perspective, tari s on reinsurance-re-
ing and pricing strategies in response to the new insurable lated services will increase the running costs for global
risks. Let us delve into the key reinsurance trends that are reinsurers, especially for services and contracts involving
expected in the near term and their likely impact. cross-border deals. Consequently, reinsurers will have to
model di erent loss scenarios, identify potential market dis-
Higher Coverage locations and revise their premium pricing models on prior-
ity. Even in the unlikely event that the US settles for a flat
While the US asserts that its tari s are intended to
strengthen its domestic economy, many industries, includ- 10 per cent tari policy for all its trading partners, reinsurers
will have their work cut out in the near term as they assess
ing insurance, are expected to face significant inflationary
and factor in the impact of the disruptions on the global
pressures. The 25 per cent duty on imported automobiles
and auto parts will not only drive up the prices of new cars reinsurance market.
and replacement parts, but also negatively impact automo-
bile insurance rates, as insurers factor in the associated cost Stagflation Worries
escalations. Similarly, the decision to levy a 25 per cent tari Within reinsurance, property reinsurance remains the larg-
on steel and aluminium imports will lead to higher construc- est and fastest growing segment, followed by casualty rein-
tion costs, and larger insurance payouts across home and surance covering liability insurance for individuals or corpo-
commercial segments. rations. In terms of regional market share, North America
accounts for 34 per cent of the global reinsurance business,
What's more, with repair costs rising on account of inflated while the Asia-Pacific region remains the fastest growing,
material cost, insurers will also have to increase the cover- with a 17 per cent market share currently.

46 September 2025 The Insurance Times