How U.S. Tariffs Could Impact UK Life Insurers—PwC Explains

From Washington to Westminster: How Trade Wars Influence Your Insurance Policy

As global markets continue to react to protectionist trade measures introduced by former U.S. President Donald Trump, their effects ripple far beyond the intended sectors and regions. While tariffs were initially designed to protect American industries and rebalance trade deficits, their long-tail impact has reached global financial services, including the UK life insurance sector. For UK life insurance consumers, the implications—though indirect—are significant, potentially affecting policy costs, investment performance, and access to services.

Introduction: Understanding The Ripple Effect of Tariff Tensions on UK Life Insurance, by PwC UK

According to PwC UK, the direct exposure of UK life insurers to U.S. tariffs may be limited, but the indirect consequences could be far-reaching and complex.

From disruptions in investment portfolios and rising operational costs, to a potential increase in the cost of private healthcare and challenges around cross-border business operations, PwC warns that these evolving economic dynamics could quietly undermine the performance and competitiveness of UK life insurers. Moreover, in a sector that relies heavily on long-term economic stability and investor confidence, the knock-on effects of protectionist trade policies could shape everything from product pricing to consumer trust.

In this article, we explore how tariffs—particularly those linked to recent U.S. economic policies—are impacting UK life insurance consumers. Drawing on insights from PwC and the broader financial ecosystem, we’ll unpack the risks, opportunities, and even the role that fintech innovation could play in adapting to this shifting global landscape.

This article explores how Trump-era tariffs continue to influence UK life insurance consumers by examining market volatility, investment disruptions, healthcare inflation, operational challenges, and the unexpected opportunities that may arise for fintech players.

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Market Volatility and Investment Disruption

One of the core indirect impacts of tariffs on UK life insurers lies in their investment portfolios. Life insurance companies traditionally rely on the performance of investment assets, such as US equities and government bonds, to sustain policyholder returns and meet long-term liabilities. According to Mohammad Khan, Insurance Partner at PwC UK:

“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.”

With trade tensions fueling market instability, particularly in sectors like manufacturing and technology, insurers face increased volatility in asset values. Lower investment yields could strain the profitability of unit-linked and investment-linked life insurance products, which are sensitive to market movements. Policyholders may also see lower bonuses or dividends on with-profits policies.

Moreover, the instability might discourage consumers from investing in life insurance products that offer investment components, further impacting growth projections and premium income for insurers.

Market Size: Over £180 Billion or $230.99 billion USD in Assets

Here are 5 key facts about the UK life insurance market (as of recent data from 2023–2024 sources including ABI, ONS, and industry research):

The UK life insurance industry manages more than £180 billion in assets, making it one of the largest in Europe. It plays a critical role in long-term savings, pensions, and financial security for millions.

Life Insurance Premiums Surpass £50 Billion Annually

In 2023, the total life insurance premiums written in the UK (including protection and long-term savings products) exceeded £50 billion or $64.165 billion USD, reflecting both individual and group policy uptake. 

Approximately 27 Million Life Insurance Policies in Force

There are around 27 million life insurance policies active in the UK, which includes term life, whole-of-life, and investment-linked products, indicating widespread consumer reliance on protection and savings solutions. The recent stats reflect a slight decline of 2.5% from the previous year.

The UK Has a Protection Gap

Despite strong uptake, there’s still a notable protection gap: a significant portion of the population (especially under 40s and renters) remains underinsured or has no life insurance at all—leaving many vulnerable to financial shocks.

Digital & Fintech Disruption Is Accelerating

Insurtech and fintech companies are reshaping the market. Over 60% of UK consumers now prefer digital-first insurance experiences, and younger demographics are increasingly turning to app-based or on-demand life insurance solutions.

Rising Healthcare Costs and Product Pricing

Another less obvious but impactful consequence is the potential increase in healthcare costs, especially in the private sector. Although US tariffs do not directly raise UK healthcare costs, the global nature of pharmaceutical supply chains and medical equipment manufacturing means that higher production and import costs in the US can create a knock-on effect worldwide.

Khan explains:

“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.”

Life insurance products that include health-related benefits, such as critical illness, long-term care, or accelerated death benefits, may become more expensive due to this indirect inflation. Consumers may experience higher premiums or restricted coverage options as insurers attempt to manage their risk exposure and cost structures.

Operational and Regulatory Challenges for Insurers

UK insurers with global operations could face operational inefficiencies due to increased cross-border friction. Companies with subsidiaries or significant business lines in the US may encounter new regulatory barriers, tariffs on financial services, or higher compliance costs.

Alex Bertolotti, PwC UK Insurance Leader, notes:

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

Restrictions on data flows, local regulatory constraints, or additional tax implications could make it harder for UK-based insurers to compete in international markets. This may lead to scaled-back product offerings, impacting consumers who rely on international portability or expect premium service consistency across geographies.

Shifts in Currency and Investment Appeal

Tariff-induced trade tensions often trigger currency volatility, particularly involving the US dollar and British pound. A weakening US dollar, triggered by US economic instability, may create investment opportunities for foreign stakeholders, potentially boosting capital inflow into UK life insurers.

According to Bertolotti: “If the US imposes tariffs that cause the US dollar to weaken, this could make UK life insurance companies more attractive to foreign investors.”

This could lead to increased investment in UK-based insurers, improving their financial stability and capacity to innovate. However, it also introduces the risk of market consolidation or increased foreign control, which could eventually impact product diversity and competitiveness.

Economic Slowdown and Reduced Consumer Demand

Perhaps the most concerning indirect consequence is the potential for a global economic slowdown, stemming from reduced trade volumes and weakened consumer confidence. A US-led slowdown could cascade into other major economies, including the UK, where financial services are deeply interconnected with international markets.

Bertolotti warns: “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.”

Lower demand could lead insurers to trim product portfolios, reduce marketing spend, and slow innovation—factors that eventually impact consumers through fewer choices, less personalization, and lower engagement.

Fintech’s Opportunity in a Turbulent Market

While traditional insurers face headwinds, the UK fintech sector is uniquely positioned to capitalize on the changes. Digital-first insurance startups (insurtechs) can respond more quickly to market shifts, optimize operational efficiency, and offer tailored products with lower overheads.

Fintech solutions leveraging AI, machine learning, and blockchain can streamline underwriting, automate claims processing, and enhance customer service—providing value at a time when large incumbents may struggle with cost containment and legacy systems.

Furthermore, the uncertainty in traditional markets may prompt consumers to explore flexible, tech-enabled insurance platforms that offer transparency, faster onboarding, and personalized coverage. As regulatory complexity increases, RegTech (regulatory technology) solutions embedded in fintech platforms can also help insurers remain compliant while reducing operational burden.

This shift opens the door for partnerships between legacy insurers and fintechs, enabling agility and innovation at scale. Consumers could benefit from lower premiums, greater policy customization, and improved user experience.

What This Means for UK Life Insurance Consumers

In summary, while Trump-era tariffs do not directly target UK life insurance markets, their second- and third-order effects are far-reaching. Consumers may face:

• Reduced investment returns on policies tied to market performance
• Higher premiums for health-related life insurance products
• Fewer product choices from globally integrated insurers
• Delayed innovation as insurers focus on cost efficiency

However, the evolving market also presents opportunities:

• Increased investor interest in UK insurers could improve product innovation
• Fintech entrants may offer more affordable, customized solutions
• Consumers may benefit from improved digital services and simplified onboarding

As the global economic landscape continues to shift, life insurance consumers in the UK must stay informed about how macroeconomic forces shape their financial planning. Insurers, meanwhile, must navigate these challenges by embracing innovation, improving operational resilience, and maintaining transparency with policyholders.

Our Outlook

​The UK life insurance market is poised for moderate growth over the next year, influenced by economic conditions, consumer demand, and industry trends.​

3-Month Outlook (April – June 2025):

• Premium Growth: Life insurance premium income is projected to grow by approximately 4.4% in 2025, down from 5.8% in 2024. ​[Source: EY]
  
  
• Market Dynamics: Stable consumer demand and an expanding workforce are expected to support the uptake of life insurance policies. ​
  
  

6-Month Outlook (July – September 2025):

• Investment Performance: Insurers’ investment portfolios may experience moderate returns, influenced by global economic conditions and interest rate trends.​
  
  
• Regulatory Developments: Ongoing regulatory reviews, such as the FCA’s market study on premium finance, may introduce changes affecting product offerings and pricing strategies. ​
  
  

12-Month Outlook (April 2025 – April 2026):

• Premium Income: Growth in life insurance premium income is forecasted to slow to 3.3% in 2026, reflecting a stabilization in the market. ​[Source: EY]
  
  
• Market Trends: The industry is likely to witness increased digitalization and a focus on personalized customer experiences, aligning with evolving consumer preferences.
  
  

Overall, the UK life insurance market is expected to navigate a period of steady yet moderate growth, adapting to economic shifts, regulatory changes, and technological advancements.

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FAQs

Our fintech analysts at Fintech Insights developed the five frequently asked questions (FAQs) on how U.S. tariffs may affect the UK life insurance market—particularly from a consumer and industry perspective—along with practical insights on how to navigate emerging challenges:

FAQ 1: Will U.S. tariffs directly raise the cost of my life insurance in the UK?

Answer:
Not directly. However, tariffs can indirectly increase operational costs for insurers (e.g., due to inflationary pressure or higher costs of medical treatment and pharmaceuticals), which may be passed on to consumers through premium increases, particularly for critical illness or income protection policies.

How to Navigate:
Consumers should review existing policy terms and compare providers annually to ensure they’re still getting the best value. It’s also wise to lock in fixed premiums where possible.

FAQ 2: How might tariffs affect my insurer’s investment performance?

Answer:
Many UK life insurers have exposure to U.S. equities and bonds. Tariff-induced market volatility or a downturn in the U.S. economy could reduce investment returns, which insurers rely on to fund long-term liabilities and maintain solvency.

How to Navigate:
Policyholders and investors should check their insurer’s financial health ratings (e.g., from Moody’s or Fitch) and diversification strategy to assess risk resilience.

FAQ 3: Could my life insurance provider scale back international offerings or services?

Answer:
Yes, insurers with a significant U.S. or cross-border presence may reduce operations, delay product launches, or reprioritize growth strategies due to regulatory complexity and cost pressures.

How to Navigate:
If you rely on international coverage (e.g., expatriate life insurance), consult with your provider about policy continuity, and consider providers that specialize in global mobility products.

FAQ 4: Will tariffs have a long-term impact on the affordability or availability of life insurance?

Answer:
Potentially. If trade tensions lead to a broader economic slowdown, consumer purchasing power may drop, and insurers could become more conservative in underwriting or pricing policies—especially those with investment elements like unit-linked plans.

How to Navigate:
Now is a good time to secure life cover at current rates and reassess your financial plan with a focus on essential protection over investment-heavy policies.

FAQ 5: Can fintech help consumers and insurers mitigate these risks?

Answer:
Absolutely. Fintech can offer cost efficiencies, AI-powered underwriting, digital claims management, and even predictive analytics for market exposure. These innovations can help both insurers and consumers adapt quickly to changing global conditions.

How to Navigate:
Choose insurers embracing digital transformation. As a consumer, using fintech comparison tools and robo-advisors can also help you find affordable, personalized cover with greater transparency.

Conclusion

Trump-era tariffs were never intended to impact the UK life insurance market, yet the interconnectedness of global economies ensures their influence is felt far and wide. 

For UK consumers, the consequences range from cost fluctuations to altered product availability. However, with challenges come opportunities. Fintech and digital transformation may offer the path forward—one that makes insurance more efficient, accessible, and responsive in an increasingly uncertain world.

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