Current tariffs on materials needed for property repairs are adding to the challenges faced by insurers in assessing and predicting risk. The outcome of these policies is uncertain, as it depends on pending court rulings.
The situation has been made more complex by the ongoing U.S. government shutdown, which has limited access to federal data. This lack of information makes it difficult for economists, policymakers, and business leaders to make reliable forecasts.
“Normally, as we wrap up Q3, we have enough data as economists, policymakers, and business leaders to start thinking about what the year will look like by the end of it,” said Dr. Michel Léonard, Triple-I Chief Economist and Data Scientist, in a recent discussion with ITL. “That’s not the case right now.”
Léonard noted that under typical circumstances GDP growth between quarters is small and predictable, allowing for better projections. However, continued uncertainty around trade agreements means that “economists are ‘flying blind about GDP at the moment.’”
This environment has also affected inventory management across supply chains dependent on imports. Companies have begun stockpiling goods ahead of new tariffs. Although replacement costs are rising more slowly than general inflation rates, consumers may see higher prices as inventories decrease—a trend that could disrupt the property and casualty insurance industry going into next year.
In personal auto markets, there was a notable increase in performance as consumers bought vehicles before tariffs took effect. Léonard suggested this could result in “less growth in the second half of the year and certainly next year.”
Paul Carroll, editor-in-chief at ITL, pointed out that ongoing tariff uncertainty may cause companies to delay investments in domestic manufacturing facilities—postponing any positive economic impact such moves might bring. Both Carroll and Léonard agreed that understanding the full effects of current tariffs will take time.
Despite these challenges clouding predictions for 2026, Léonard observed that insurers managed to avoid “the worst-case scenarios” this year and described a “resilient U.S. economy, both in terms of growth and inflation.”
“We’re going to end the year most likely in a better place than we expected, and we should be very happy about that,” he concluded.
A complete transcript of their discussion is available.
