In a time of growing instability, there’s one thing we can be certain of: President Donald Trump is going to make your insurance more expensive.
Before getting elected to Congress, I worked in the insurance industry, where I helped build new solutions to changes in homeownership, mobility and litigation. The president’s every action, from tariff threats to targeting immigrant workers, is setting off actuarial alarm bells.
Expect double-digit tariffs to lead to double-digit auto insurance hikes — notably, quite the opposite of Trump’s campaign promise to cut auto insurance premiums in half.
Insurance companies underwrite risk. First, they calculate how likely a claim is (e.g., car accident, house fire, heart attack). Then, how much will it cost to make the claimant whole? The insurance bills in your mailbox are a message from the future about the cost of living.
And currently, the message is that costs are going up. They are going up because of tariffs. They are going up because of the nature of the administration’s use of the legal system. And they are going up because the rolls and responsibilities of the uninsured will expand.
Homes and cars are bundles of lumber, steel, aluminum and semiconductors. The president plans to tax all those materials at double-digit rates. That inflation will course through repair-or-replace costs for automobiles. Expect double-digit tariffs to lead to double-digit auto insurance hikes — notably, quite the opposite of Trump’s campaign promise to cut auto insurance premiums in half.
Home insurance may be even more sensitive to the president’s agenda. In 2022, the United States imported $469 billion in construction-related goods, accounting for nearly 15% of total U.S. imports. Canada alone accounts for 50% of U.S. wood imports and 20% of metal imports. With Canadian goods getting taxed, the material costs of home construction and repairs surge. So will the labor costs: The construction industry has the highest percentage of undocumented workers of any sector. Whether through deportation or fear, its labor force participation is likely to decline. That will spike homebuilding costs everywhere, particularly in Florida, Texas and California.
In addition to predicting repair costs, insurance companies must account for litigation. Insurance is a contract. Jurisdictions that resolve contract disputes fairly and efficiently have lower litigation costs. That, in turn, lowers premiums for everyone. One thing we have learned about Trump is that he appears to love litigation, little of it fair or efficient. His administration’s attitude of lawlessness is a hidden tax on the legal system. And that tax gets written into insurance premiums.
The secretary of health and human services, Robert F. Kennedy Jr., for example, has made a career of vexatious lawsuits. If Kennedy makes his track record the standard, then medical claims extortion will swell. Third-party funders may get rich, paid for with your higher insurance premiums.
Health insurance premiums may inflate from yet another driver. Trump and congressional Republicans appear intent on axing Medicaid, which insures children, the poor and the elderly. The uninsured still get sick, though. Lacking access to preventive care, they may get sicker faster. When they do, they go to emergency rooms, where hospitals foot the bill.
Actually, you foot the bill, because hospitals bundle the cost of uninsured care into the rates they charge for insured care. Especially if you are insured through your employer, your premiums will pay for the government’s cuts to Medicaid.
To be clear, this is no pass for the health insurance companies. Their price-gouging was a problem before Trump, and I have long helped lead the charge to rein them in. But the president is making cost containment harder.
On the home and auto side, by contrast, the insurance industry has not been profiteering. The home and auto insurers do not underwrite a profit margin. Profit comes from the float, which is their returns on investing. Those returns are a function of interest rates and asset management, not underwriting.
Home and auto insurance bills reflect future costs. Those costs are going up. As homeowners, motorists and employees get squeezed, make no mistake: Trump and his administration will be to blame.