APCIA: U.S. tariffs could increase personal auto claims costs up to $60 billion over 12 months

(The Insurer) - Insurance will be “deeply impacted” by U.S. tariffs, American Property Casualty Insurance Association CEO David Sampson has said, including personal auto claims costs alone increasing by $30 billion to $60 billion over the next 12 months.

In a post on LinkedIn, Sampson said that APCIA has been informing federal policymakers about the potential impact of tariffs increasing automotive repair costs, home rebuilding, and ultimately auto and property insurance rates.

According to APCIA, the tariffs could increase claim costs by an estimated $30-$60 billion for personal auto insurance alone over a 12-month period.

“The insurance industry will be deeply impacted by the tariffs,” Sampson said. “Many insurance cost inputs - particularly steel, lumber, and heavy equipment needed for auto and home repairs - are globally sourced.

“While tariffs may not lead to a direct one-to-one increase in claims or construction costs, especially if exchange rates absorb part of the impact, they still introduce friction: delays, price volatility, and inflationary risk across supply chains. For insurers, that translates into greater uncertainty around claims severity, reinsurance pricing, and asset planning,” he continued.

Sampson outlined five concerns about the broader macroeconomic and geopolitical impacts of escalating tariffs on the marketplace.

First, the global impact of the tariffs is shifting the world's divisions from primarily geopolitical alliances to economic trading blocs, with friction arising among the U.S.’s closest allies from Canada to Japan and lines between allies and adversaries being blurred.

Second, Sampson said the emerging economic friction complicates the challenges of building an anti-China coalition. As an example, he said the tariffs on Southeast Asia undercut a decade of U.S. policy aimed at reducing regional reliance on China and “punish firms that relocated from China to SEA”.

Third, he said the challenge for U.S. treaty allies is also significant because of the tariffs.

“I doubt Japan will respond aggressively, given its limited strategic alternatives. Still, the harm to the domestic constituencies of U.S. allies - such as their exporters and industrial manufacturers - will call into question their security cooperation with the U.S,” he said.

Fourth, he said the sudden imposition of tariffs may also accelerate efforts by U.S. allies to expand alternative economic partnerships to hedge against a less-reliable U.S.

And lastly, Sampson said: “Even if tariffs are reversed quickly - though that seems unlikely - it could reinforce the growing perception of the U.S. as an unreliable or self-interested actor.”

Sampson’s comments follow Robert Hartwig, clinical associate professor of finance and insurance at the University of South Carolina, telling The Insurer that insurers should closely monitor underlying claim severity trends resulting from the tariffs and quickly incorporate them into ratemaking,

Hartwig pointed to the tariffs’ potential impact on multiple lines of business.

“Auto lines, personal and commercial, as well as all property lines, are affected because of the significant import component in residential and commercial construction,” he said.

Transportation-related lines such as ocean marine, inland marine, as well as trade credit insurance could also be hit while broader industry segments like energy and aviation are also vulnerable.