As we move into 2025, several economic and regulatory factors are shaping the commercial insurance landscape. In this edition of our Union Risk Services market update, we examine how the recent tariff policies could impact insurance pricing, the broader insurance market outlook, and the ability of businesses to secure coverage.

The Tariff Effect on Insurance Costs

The U.S. has imposed new or expanded tariffs on several key imports, including materials commonly used in construction and transportation. These tariffs create ripple effects throughout the economy, influencing everything from operational costs to supply chain stability. Here’s how they could affect your insurance:

Higher Replacement & Repair Costs: Tariffs on steel, aluminum, and manufactured parts mean higher costs for repairing or replacing damaged property, vehicles, and equipment. Insurers will adjust their pricing to account for increased claim expenses.

Increased Business Interruption Exposure: Supply chain disruptions caused by tariffs could lead to delays in materials, project timelines, and revenue cycles. Insurers may raise rates on business interruption coverage or add stricter policy conditions.

Greater Underwriting Scrutiny: Insurance carriers may start scrutinizing risk more carefully for industries that are highly sensitive to cost increases especially construction and transportation, where margins are already thin.

 

The Overall Insurance Market Moving Forward

The commercial insurance market remains in a hard market across multiple lines of coverage. While some areas, like workers compensation, have seen stabilization, others such as auto liability, general liability, and umbrella coverage continue to face significant upward pricing pressure.

Construction Insurance: Rising costs of labor, materials, and project delays due to economic uncertainty will keep rates high. Additionally, nuclear verdicts in liability cases mean increased legal expenses, which are passed on through higher premiums.

Transportation Insurance: The commercial auto sector remains volatile. Higher claim costs, litigation risks, and underwriting restrictions have driven rates upward. Fleet operators may see stricter policy terms, particularly for excess liability and umbrella coverage.

Real Estate Insurance: Property insurance rates continue to climb due to inflationary pressures and natural catastrophe risks. Carriers remain cautious about writing coverage in certain markets, leading to limited capacity and higher deductibles.

Manufacturing: Businesses in manufacturing face increased fire risk exposures due to production changes and supply chain bottlenecks.

Private Equity: Private equity firms with portfolio companies across multiple industries may find it harder to secure umbrella and D&O coverage at competitive rates. While also seeing premium rising for their portfolio company’s Auto Liability, General Liability, and Workers Compensation.

 

Challenges in Securing Insurance

As insurers continue to manage risk conservatively, businesses are facing:

• Tighter Underwriting: Many carriers are requiring higher deductibles, restricting coverage for certain exposures, or demanding stricter safety protocols before offering competitive pricing.

• Limited Capacity for High-Risk Sectors: Companies in industries with frequent claims or high loss severity such as heavy construction, trucking, and waste management are finding fewer carriers willing to provide coverage, often leading to reduced options and increased pricing.

• Stronger Demand for Alternative Risk Solutions: Given these challenges, businesses are looking at captive insurance and self-insurance solutions as ways to regain control over costs and stabilize long-term pricing.

 

How Union Risk Can Help

Union Risk Services specializes in helping businesses in construction, transportation, manufacturing, real estate, and private equity navigate these insurance market challenges. Our expertise in captive insurance solutions allows companies to:

• Reduce dependency on the commercial markets pricing volatility

• Retain underwriting profits within their own risk-financing structure

• Secure long-term stability in premiums while improving risk management

 

If you’re looking to take greater control over your insurance costs and coverage availability, let’s schedule a time to discuss your options.