With Donald Trump’s imminent return to the White House, re/insurers are now reconsidering the policies that shaped his first presidency and preparing for the potential impacts on the sector.
Trump’s “America First” agenda is expected to re-emerge in full force, potentially influencing areas such as trade policy, tax reforms, climate regulations, and economic growth in ways that could have direct consequences for the re/insurance industry.
During Trump’s first term, the industry had mixed reactions to his policies. His corporate tax cuts in 2017, which lowered the US tax rate from 35% to 21%, benefitted some US insurers, but raised concerns about increased competition for offshore reinsurance centres and could make it harder for international players to compete.
Now, analysts suggest Trump’s administration could consider further reductions, potentially to 15%. A renewed push for lower corporate taxes could mean further competition for offshore reinsurance centres.
For some US firms, this could result in a new competitive edge, as lower tax rates may entice more firms to shift operations domestically, potentially squeezing offshore hubs.
The global re/insurance community remains cautious about Trump’s stance on international agreements and trade policies, which could create complex challenges.
In 2017, uncertainty appeared over the $3 billion transatlantic reinsurance market as the Trump administration took a critical view of the Covered Agreement, an EU-US arrangement intended to ease regulatory burdens.
A second Trump term could prompt further scrutiny of agreements that the administration perceives as disadvantaging US interests, adding a layer of unpredictability to international reinsurance partnerships.
Climate policy represents another crucial issue. During Trump’s first term, he withdrew the US from the Paris Climate Agreement, a decision opposed by leading reinsurers such as Swiss Re and Munich Re.
These firms emphasised that climate change poses significant risks to economies and societies globally, and they highlighted the importance of coordinated climate action.
Swiss Re pointed to rising annualised losses of 1–12% of GDP from climate risks, underlining the costly impact of extreme weather events that are increasingly affecting the industry’s bottom line.
Trump’s return to office could bring renewed rollbacks on climate regulations, potentially putting the US on a path divergent from global climate efforts, an outcome that may worry companies focused on climate risk management.
From an economic perspective, Trump’s policies could present both opportunities and challenges for the re/insurance sector.
Trump’s economic policies, including deregulation and fiscal stimulus, may drive inflation and destabilise interest rates, creating significant risks for insurers. Higher inflation may lead to increased claims costs, especially in sensitive lines like property and casualty, further compressing margins for re/insurers already grappling with economic instability.
Higher rates could enhance investment returns for insurers with significant bond portfolios, while also influencing premium pricing and overall market dynamics. However, rapid inflationary pressure might also lead to increased claims costs, particularly in lines sensitive to economic shifts, such as property and casualty.
The upcoming term could see heightened social inflation—an ongoing issue in the US where rising litigation costs have impacted claims.
Trump’s lack of focus on tort reform at the federal level means that while a second term may continue to sideline the issue, the state-level efforts would likely persist. Without federal reform, insurers may still face rising claim settlements and legal costs, which have already been a growing concern for many US carriers.
The re/insurance industry will also be watching for any policy shifts regarding the regulatory landscape. During Trump’s first term, his administration introduced changes to the Dodd-Frank Act, particularly affecting financial oversight.
A second term under Trump could see the continuation of deregulatory policies that reduce oversight in the financial services industry. While this may offer short-term cost savings, it could increase systemic risk and lead to long-term instability, particularly in a less-regulated re/insurance environment.
The international political and economic implications of a Trump administration’s trade stance, tax agenda, climate posture, and deregulatory priorities suggest that the industry’s key players will need to stay agile, adapting to potential shifts in US policy while also maintaining a long-term focus on growth and risk management.
As the sector prepares for the next four years, Trump’s prospective return is likely to echo many of the issues that marked his first presidency—but this time, with the added complexity of addressing them in an even more interconnected global market.
