Global trade flows have been reshaped by trade wars and conflict. The effects are impacting multiple lines of insurance business. 

Trade credit and surety

Trade credit insurance helps protect businesses from losses resulting from the inability of customers to pay for goods or services, often due to economic factors or external disruptions. If tariff-related price increases lead to a sudden loss in market demand, or an increase in buyer defaults, trade credit insurance could mitigate some of the financial risks for businesses involved in international trade. Underwriters in this space must now model the creditworthiness of international buyers in an environment where tariff exposure can materially alter a customer's ability to pay, often with very little notice.

Political risk

While political risk insurance is most frequently associated with adverse political events in developing economies, an escalating trade war could lead to circumstances where a government in a major, developed economy takes action that triggers coverage (for example, the revocation of a company's licence to operate in-country, trade embargoes, or the forced divestiture of a local subsidiary by its multinational parent). Underwriters who have historically priced political risk in emerging markets may need to apply similar scrutiny to more established trading partners.

Tariff regimes can change rapidly, which may initially look like political risk. However, political risk policies do not intend to cover economic or commercial risk. A tariff regime that does not stop a business from operating (or even if it does, due to increased costs) is likely to be characterised as a commercial risk rather than a political one. However, if a tariff measure is discriminatory or targeted in nature rather than general, there is potential to trigger political risk policies, depending on the situation and how the policies are worded.  

D&O

Tariff-related market turmoil has resulted in large losses. Since securities and derivative lawsuits frequently follow large decreases in stock prices, it is likely that at least some companies will be targeted for having allegedly failed to adequately disclose their exposure to trade-related market impacts. D&O underwriters should expect an uptick in securities litigation tied to tariff disclosure failures, particularly where companies had significant supply chain or revenue exposure to affected territories, and did not reflect that clearly in their market communications.

Marine

Shifts in trade routes and cargo patterns as importers and exporters seek to navigate around tariff barriers and conflicts creates new exposures in markets and geographies.