PwC comments on impact of tariffs on UK Life Insurers

Alex Bertolotti, PwC UK Insurance Leader, says:

“Although the impact of the current increases in tariffs do not have a direct impact on UK life insurers, the indirect effects - such as impact on investment portfolios, potential increases in the cost of care, higher operational costs and investibility into the UK Life insurance sector - could present challenges.  

“UK insurers with investments in the US or a significant cross-border business might experience more pronounced effects, while domestically focused UK insurers may be less affected. The overall global economic climate resulting from tariff policies will play a major role in determining the level of impact.” 

Mohammad Khan, Insurance Partner, PwC UK adds: 

On investment portfolios:

“Some UK life insurers have exposure to US financial markets. If tariffs disrupt the US economy, it could affect the performance of investments in US equities and bonds. This could negatively impact insurers’ investment returns, which are a source of income for life insurance companies. 

“The currently market instability caused by the US tariffs and retaliatory tariffs could cause people to invest less in investment products offered by life insurers reducing the growth in these products that many life insurers may have had in their business plans at the beginning of 2025.”   

On increases in cost of care:

“Although the US tariffs will not directly impact the cost of care, the interconnectedness of global trade and the pharmaceutical industry's reliance on international supply chains means that the cost of private treatment may go up which may increase the prices of some life insurance products, for example, critical illness cover.”  

On international operations: 

“Some UK life insurance companies operate globally, and if tariffs are imposed on services or financial products, insurers may find it more expensive or challenging to offer competitive products in the US or other markets. This could affect their profitability and market share, especially if they have significant US-based operations or sell products to US citizens.” 

On investibility in UK Life insurance:

“Tariffs and trade tensions often lead to fluctuations in currency values. If the US imposes tariffs that cause the US dollar to weaken, this could make UK life insurance companies more attractive to foreign investors.”

On potential economic slowdown: 

“If the tariffs lead to an economic slowdown in the US, it could have a ripple effect on the global economy, including the UK. Lower economic growth can impact the demand for life insurance products, as individuals and businesses may delay purchasing or renewing policies due to financial uncertainty.”