Trump's Insurance Policy Changes: Home And Auto Included?

Former US President Donald Trump has claimed that he can reduce auto insurance rates by 50% if he is elected again. While auto insurance rates have been increasing, it is unclear where Trump's figure of 73% comes from. Experts suggest that the federal government has very little influence over insurance rates, which are regulated at the state level. However, there are some steps the federal government could take to reduce auto insurance costs, such as investing in the National Highway Traffic Safety Administration and bringing down overall inflation. Additionally, state-level elections could impact auto and home insurance for voters in certain states, as the insurance commissioner has the power to approve rates filed by insurance carriers and regulate the insurance industry within their state.

Trump's tariffs on auto parts from China could increase collision repair costs for insurers

While it is unclear what specific trade policies former President Donald Trump would adopt if he were to return to the White House, Trump's tariffs on auto parts from China could increase collision repair costs for insurers.

In 2018, Trump's administration imposed a 10% tariff on Chinese-made products, largely targeting auto parts, which would increase to 25% in 2019. Insurers argued that this move would raise costs for consumers and policyholders. Indeed, Robert Passmore, PCI's assistant vice president for Personal Lines Policy, noted that a 25% tariff on auto parts from China could raise collision repair costs for insurers by 2.7%, ultimately passing on an additional $3.4 billion to policyholders.

The auto parts tariffs drew the most industry attention, with insurers lobbying against them for months. They argued that 60% of auto parts used in the United States are imported, and raising the cost of these parts through tariffs could make cars more attractive to thieves and increase the likelihood of vehicle theft.

Trump's proposed 100% tariff on imported vehicles, if applied to both cars and component parts, would also have a significant impact on the US auto industry and economy. The industry relies on a complex supply chain, with cars assembled in the US containing parts from all over the world, especially Mexico, Canada, and China. A 100% tariff on imported vehicles and parts would likely lead to price increases for both domestic and imported cars, new and used, resulting in higher costs for consumers and putting thousands of US auto workers at risk of unemployment.

While Trump's specific intentions regarding auto insurance remain unclear, his proposed tariffs on auto parts from China could indeed increase collision repair costs for insurers, with potential negative consequences for both the industry and consumers.

Trump's tariffs on Canadian lumber could increase the cost of replacing a roof, shingles or siding

Trump's tariffs on Canadian lumber could increase the cost of replacing a roof, shingles, or siding. The former US president imposed a 20% tariff on softwood lumber from Canada, which drew criticism from the Canadian government and could lead to higher costs for builders and homeowners.

The tariff on Canadian lumber is part of an ongoing trade dispute between the two countries, with the US arguing that Canada unfairly subsidizes its lumber industry, giving them an advantage over American producers. The Canadian government, however, has denied these claims and called the tariff an "unfair and punitive duty."

The impact of the tariff on the cost of lumber and construction is significant. Lumber prices have a history of being volatile, and the tariff will likely contribute to price increases. This will particularly affect homeowners and builders, as lumber is a significant cost element for many construction projects, such as roofing, shingles, and siding.

Economists and industry experts have expressed concern over the potential impact of the tariff on the cost of construction and the availability of lumber. They predict that the tariff will result in higher prices and constrained supplies, making it more difficult and expensive for contractors to source the material needed for construction projects.

While the exact impact of Trump's tariffs on the cost of replacing a roof, shingles, or siding cannot be determined, it is clear that the increased tariff on Canadian lumber will result in higher costs for builders and homeowners. The tariff will likely contribute to price increases for lumber and could make it more challenging for contractors to access the necessary materials, ultimately driving up the cost of construction projects.

Auto insurance rates have been rising since supply line disruptions during the COVID-19 pandemic

According to the motor vehicle insurance index compiled by the U.S. Bureau of Labor Statistics (BLS), average car insurance rates have increased by more than 50% between August 2020 and August 2024. This is significantly higher than the cumulative U.S. inflation rate of approximately 21% during the same period.

The rise in insurance rates has been driven by several factors, including general inflation and the increased cost of vehicle repairs. The complexity of modern vehicles, with their advanced sensors and technology, has made repairs more expensive. Parts are also becoming a more significant portion of the overall insurance rate, as it is no longer possible to use cheap aftermarket parts, and original parts with advanced sensors are much costlier.

In addition, supply chain disruptions have led to repair delays, further increasing costs. The pandemic also caused a reduction in driving, which may have contributed to a relaxation of driving habits. According to the National Safety Council, speeding-related deaths increased by 19% in 2020 and another 9% in 2021, resulting in the highest number of traffic fatalities since 2007. Distracted driving and drunk driving have also increased, with drunk driving accounting for approximately 32% of crash fatalities.

While the rate hikes affect all drivers, those with poor driving records, including accidents, speeding tickets, and DUIs, face substantial increases in their insurance premiums. Additionally, drivers with poor credit ratings may also pay significantly more for their insurance, even if they have a good driving record.

The rise in insurance rates has been a challenge for many Americans, especially when coupled with higher costs for food and housing. While former President Donald Trump has promised to cut insurance rates in half if re-elected, it is unclear how much impact the president can have on auto insurance costs, as insurance is primarily regulated at the state level. However, the federal government can take some steps to address the issue, such as investing in campaigns to improve road safety and addressing overall inflation.

The federal government has very little to do with insurance rates

Each state has its own insurance commissioner, who works alongside state legislators and insurance companies to monitor rates, control fraud, and determine best practices in the industry. The insurance commissioner is responsible for approving rates filed by insurance carriers, subjecting insurers to financial examinations, monitoring and regulating claims handling processes, and licensing insurance agents. The commissioner's role is to ensure that the industry operates in a fair and sustainable way, protecting consumers from unduly steep rate increases while also making it profitable for insurers to do business in their state.

In the United States, auto and home insurance are regulated at the state level. Each state regulates insurance differently, and individual insurance departments in all states review requests from insurers for rate changes. Decisions made by insurance regulators are based on actuarial analysis of past losses and expectations for future losses. This means that any attempt by the president to reduce insurance rates would require negotiating with 50 state insurance commissioners, which is highly unlikely.

While a president can influence federal monetary policy, which can impact inflation and thus insurance rates, the impact on insurance rates is indirect and subject to the actions of the Federal Reserve. Additionally, the president can contribute to making roads safer through organizations like the National Highway Traffic Safety Administration (NHTSA), which can help reduce the number of accidents and claims. However, the impact of these actions on insurance rates would be marginal and not immediate.

The president would have to battle with 50 state insurance commissioners to reduce rates

The insurance commissioner is a state-level position in all 50 states. The duties of the position vary from state to state, but their general role is as a consumer protection advocate and insurance regulator. The position is elected in 11 states and appointed in 39, with 37 of those appointments made by the Governor.

The powers granted to the office of an insurance commissioner differ in each state. While their primary purpose is to maintain fair pricing for insurance products, protect the solvency of insurance companies, prevent unfair practices by insurance companies, and ensure the availability of insurance coverage, insurance commissioners are also responsible for:

• Approving insurance rates
• Conducting periodical financial examinations of insurers
• Licensing companies, agencies, agents, and brokers
• Monitoring and regulating claims handling

Because insurance law and regulation are established individually by each state, a president would have to battle with 50 state insurance commissioners to reduce rates. This would be an incredibly difficult and likely impossible matchup.

While insurance commissioners are members of the National Association of Insurance Commissioners (NAIC) to better coordinate insurance regulation among the states and territories, the federal government has very little to do with insurance rates.

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