Why trade wars make commercial coverage reviews critical

Tariffs from the current U.S. administration, both enacted and threatened, are a source of constant confusion that can cause Canadian businesses to make reactive and aggressive strategy shifts.

But that’s the wrong approach, brokers tell Canadian Underwriter. And so, commercial brokers’ first order of business is to counsel their clients to step back, take a deep breath, and quantify their risks in this newfound economic landscape.

“It’s easy to dive in and make rash decisions based on the economic environment, the uncertainty [and] pressures from investors,” says Daniel Kotwinski, who heads Marsh Advisory Canada.

“If you move too quickly, what you can actually do is…bring unquantified or unknown risk on to your organization, [leading you to] find yourself in a worse risk position if something were to happen.”

For example, a company might respond to tariff threats by quickly switching to suppliers in countries that don’t face new levies. But those newfound suppliers may lack robust risk management programs, or might be taking excess orders they’re not capable of filling.

“Now our client has shifted their supply chain…brought additional risk on through that…and a loss may happen, impacting them that much more negatively than if they hadn’t done anything at all,” Kotwinski says.

Why innovative customer experience will define the future of personal auto insurance Image

Insights Paid Content

Why innovative customer experience will define the future of personal auto insurance

Technology is helping insurers reimagine how they support personal auto customers — and it starts the moment a collision is reported, say experts at Accident Support Services International.

By 

Sponsor Image

He urges clients to question suppliers about supply chain specifics. Using a proprietary AI-driven tool, the brokerage shows clients what’s happening three or more layers back in their own supply chains. Marsh also recently deployed a tariff simulator that lets clients compare scenarios to better understand tariff implications within their supply chains.

The exercise helps a client understand the costs associated with their firm’s landed goods at any given location. That’s important because tariffs are causing the values of those goods to change between the time they’re originally purchased and when they’re landed, says Michael Lewis, chief commercial officer at Marsh McLennan Canada. “The values…may be vastly different [for] the landed goods compared to…the insurance policy that they’ve purchased.”

How tariffs may impact insurance for Canadian liquor sellers Image

Commercial

How tariffs may impact insurance for Canadian liquor sellers

Threatened U.S. tariffs and Canadian retaliatory tariffs could raise prices for many goods Canadians routinely buy, including liquor.

3 min read

He says understanding the true landed costs of those goods “and appropriately reflecting it within their marine cargo policy is paramount. A lot of organizations will make these business decisions without reflecting on, ‘What does that mean from a risk point of view?’”

By and large, mitigating the trade war’s impacts will fall largely to brokers, says Jake Hovinga, commercial lines manager at Mitch Insurance. He says brokers “need to be reviewing limits with clients” that may be holding more stock due to slowed sales.

Clients also need to understand how the source of raw materials and other business inputs will impact insurance costs.

“Some insurers don’t prefer China, for example. If you started to get…a product from China, or raw material from China, manufacturers are always liable to the end user,” he says. “If you were to use a lesser material or a lesser part from a different foreign entity, you may open yourself up liability-wise if your product became defective.”

This article is excerpted from one that appeared in the June-July, 2025 print edition of Canadian Underwriter.

Phil Porado

Phil, an award-winning journalist with over 30 years of experience in financial topics, has been managing editor of Canadian Underwriter for more than three years.