The recent U.S. tariff policies, including a universal 10% tariff and targeted levies on imports from China, Canada, Mexico, and the EU, are reshaping the domestic insurance landscape. As a top-40 insurance broker offering comprehensive solutions across business, personal, benefits, and financial lines, ALKEME understands how these changes will impact clients now and in the future. Furthermore, escalating cyber threats tied to the U.S.-China trade tensions highlight the critical need for robust cyber insurance coverage.

Domestic Insurance Market Impacts

At ALKEME, we recognize that tariffs are driving up costs across industries, which directly affects insurance premiums and coverage needs. Here’s how specific sectors are being impacted:

Auto Insurance

• Tariffs on imported auto parts (25%) are increasing repair costs, with premiums expected to rise by 6-10% by late 2025.
• Higher replacement costs for foreign-made vehicles mean clients may need to adjust their coverage limits to avoid gaps in protection.

Homeowners Insurance

• Tariffs on Canadian lumber (25%) and Chinese steel (20%) are inflating rebuilding costs by 15%, leading to higher premiums and coverage adjustments.
• Supply chain disruptions for construction materials may prolong repair timelines after disasters, increasing additional living expense claims.

Healthcare Costs

• Healthcare providers are passing tariff-driven cost increases to insurers and patients. For example, a 25% tariff on Canadian pharmaceuticals could add $750M+ annually to drug costs.
• ALKEME’s benefits solutions can help employers mitigate these rising healthcare expenses through strategic plan design and cost-containment strategies.

China Tariffs and Cyber Threat Escalation

The U.S.-China trade war has created heightened risks for businesses operating in an increasingly digital world. ALKEME emphasizes the importance of understanding these risks and securing proper cyber insurance coverage.

1. State-Sponsored Espionage

   • Chinese advanced persistent threat (APT) groups are ramping up cyberattacks targeting U.S. infrastructure as trade tensions escalate. Businesses face growing risks of intellectual property theft and operational disruptions.

2. Supply Chain Vulnerabilities

   • Companies replacing Chinese suppliers often overlook security protocols, exposing themselves to counterfeit hardware or compromised software updates. These vulnerabilities increase exposure to cyberattacks, including ransomware incidents.

3. Phishing Scams

   • Cybercriminals exploit confusion around tariffs with fraudulent emails claiming customs fees or fake trade relief offers. These scams target businesses and individuals alike.

The Critical Role of Cyber Insurance

As cyber threats grow more sophisticated, ALKEME helps clients navigate the complexities of cyber risk management with tailored insurance solutions that provide comprehensive protection.

Key Coverage Areas:

• Ransomware payments: With average payouts exceeding $1.5M in 2024, cyber insurance ensures businesses can recover quickly without crippling financial losses.
• Business interruption: Coverage for revenue losses caused by network outages or supply chain disruptions due to cyberattacks.
• Regulatory compliance: Protection against fines or legal fees stemming from violations of GDPR, HIPAA, or CPRA regulations.

Underwriting Trends:

Insurers now require businesses to adopt proactive cybersecurity measures such as:

• Multi-factor authentication (MFA) for all systems
• Endpoint detection response (EDR) tools
• Managed detection and response (MDR) services

Businesses implementing these measures can benefit from 20-30% lower premiums, while policies increasingly exclude preventable breaches caused by outdated systems.

Strategic Recommendations from ALKEME

As an industry leader in insurance solutions, ALKEME advises clients to take proactive steps to mitigate tariff-related risks:

1. For Auto/Homeowners Insurance:

   • Review coverage limits regularly to ensure protection against inflation-driven costs for repairs or replacements.
   • Explore usage-based policies to offset premium increases.

2. For Businesses:

   • Diversify suppliers to reduce reliance on tariff-affected regions while conducting regular security audits of third-party vendors.
   • Invest in cybersecurity tools that align with insurer requirements to secure optimal rates on cyber insurance policies.

3. For Cybersecurity Teams:

   • Leverage AI-driven threat detection systems to counter emerging risks such as deepfake fraud and phishing scams tied to trade policy developments.
   • Participate in industry information-sharing networks like ISACs for real-time intelligence on tariff-related threats.

At ALKEME, we believe that navigating today’s volatile economic landscape requires a combination of strategic planning and comprehensive insurance solutions tailored to evolving risks. Whether you need business coverage for rising operational costs or cyber insurance to protect against escalating threats, our team is here to deliver peace of mind and financial security for every client we serve.