2025 Trump Policies: How can it change insurance?

In this video Matthew discusses potential changes in the insurance industry that could arise from Donald Trump’s policies, even though insurance is primarily regulated at the state level. Let’s get into the potential pros, cons, and uncertain areas based on two articles from the Insurance Journal.

First, what are the potential pros?

  • Corporate Tax Cuts: Lower taxes could help insurance companies operating at a loss become profitable, potentially leading to less aggressive price increases for consumers in the long run. Profitable companies might prioritize customer retention over aggressive price hikes.
  • Removal of the Federal Insurance Office (FIO): Nine state Insurance Commissioners have requested its removal. Matthew, a fourth-generation insurance agent, notes limited interaction with the FIO and questions its impact on the average consumer beyond administering terrorism coverage.

Now for potential Cons…

  • Tariffs on Mexico: The Chief Economist at the Insurance Information Institute suggests that a potential 25% tariff on Mexican car parts (which constitute about 38% of US car parts) would significantly increase repair costs, leading to higher insurance premiums for consumers.
  • Cutting back or removing NOAA: The National Oceanic and Atmospheric Administration provides crucial real-time weather modeling and forecasting data used by insurance actuaries to build risk models. Removing this information source could negatively impact the accuracy of risk assessment and potentially lead to inappropriate pricing, especially with increasing extreme weather events.

Now, this next category is best labeled as it depends.

  • Cutting back on or removing FEMA: While acknowledging potential issues with FEMA’s response to disasters, Matthew also points out the potentially high earnings of flood adjusters, suggesting possible inefficiencies within the system. Additionally, FEMA has a reputation for poor claims handling.
  • Cutbacks to the Federal Trade Commission (FTC): Less FTC involvement in mergers and acquisitions could lead to lower pre-merger scrutiny but potentially higher costs for directors’ and officers’ coverage due to unexpected regulatory impacts later.
  • Cutting back on the Securities and Exchange Commission (SEC): Reduced SEC regulatory action on mergers and acquisitions could decrease the risk associated with directors and officers’ coverage.

Speculation aside, it is clear that there needs to be preparation for changes in the future. Insurance is not a stagnant entity and moves as the times do.