A controversial proposed change to US trade policy imposing significant new tariffs has not just created adverse reaction on Wall Street, but has also raised angst in the insurance and reinsurance community.

In the 14th annual Global Insurance Survey published at the end of March, Goldman Sachs Asset Management said tariffs and trade disputes now rank fifth among the top 10 risks to investment portfolios. It didn’t even appear on the list, last year.

Nearly one-third of 405 chief investment officers and chief financial officers surveyed cited it as a major concern, during a poll conducted from January to February 2025.

Tariffs on imported goods into the US could negatively impact Bermuda reinsurers too, an industry insider has told The Royal Gazette.

“The biggest issue is uncertainty, and uncertainty is never good,” said the reinsurer who asked not to be named.

The executive said recession was a particular concern.

J P Morgan Research has put the risk of Trump-related recession, in America, in 2025, at 60 per cent.

“A recession has a negative impact on insurance values, because while costs are going up, people buy less, so then the total amount insured reduces,” the senior reinsurer said. “In a recession, reinsurers worry about their credit exposure.”

There is also a heightened chance of property damage insurance claims caused by unrest as people who have lost their jobs, or civil rights, lash out.

“Hundreds of thousands of people are protesting right now,” the executive pointed out.

Reinsurers are also concerned about a possible hit to investments, risks and exposures. That depends on how long the tariffs persist and how much they destabilise the economy.

A PwC report, released in February, warned that US trade policy could impact property and casualty insurance.

“If some of the recently announced tariffs with Canada and or Mexico are enacted, the severity of auto and homeowner claims could increase due to increased prices for aftermarket auto parts and construction materials,” the report stated.

It also said: “Similarly in commercial lines, inflationary impacts can vary widely across sectors based on the magnitude and scope of new tariffs.

“For instance, if the cost of raw materials, ranging from oil and natural gas to timber and minerals, increases, public budgets may become increasingly strained, raising the risk of defaults. This is likely to pressure insurers that focus on the public sector.”

While ratings agency Standard & Poor’s predicted that tariffs will have only a minor impact on global reinsurers, local industry concedesit is still too early to tell what will happen.

“Trump could completely back off everything tomorrow,” one observer said: “We do not know where this is going. There may be some temporary blips that may go away, but it is the ‘what comes next’, that is worrying.”

One observer noted that we will not be in the same situation several months from now, or, possibly even a week from now: “The question you should be asking is where will we be three years from now.”