Tariffs and market swings are rewriting how insurers evaluate risk in wood product and stock coverage
 
At Keith D. Peterson & Company, lumber tariffs aren’t a distant policy concern – they’re a direct operational threat. Amid surging raw material costs, redirected exports, and inflationary pressure, Connor Peterson (pictured) sees one constant: “Claim settlement costs are going to increase.” 

With stock values and rebuild costs both climbing, insurers face mounting challenges in underwriting and claims accuracy. “There’s only so much domestic supply for lumber,” Peterson said. “But then there’s also a vast majority of subcomponents that are coming from outside the US.” 

Two pressure points: claims and capital 
Insurers are being squeezed from both ends. On one side, the cost of claims continues to rise – fueled by inflation and a fractured supply chain. On the other, market volatility is pressuring investment portfolios. “Insurance carriers have had to reduce the amount of exposure they have to... equities,” Peterson said, citing a shift toward safer holdings like bonds and mutual funds. This shift could make underwriters more cautious – especially when it comes to high-hazard occupancies. 

That caution is rippling into the field. “If there is a property loss, it’s going to cost more to fix it,” Peterson said. And valuation gaps are widening, especially for clients relying on outdated cost models. 

The valuation trap in cross-border stock 
For insurers and their clients, the biggest wildcard remains Canadian lumber. If domestic stock is depleted, refilling from Canada means triggering softwood tariffs as high as 40%. “That is a valuation issue,” Peterson said. If policies don’t reflect these inflated costs, clients risk falling into co-insurance penalty territory. 

Vital statistics
US softwood imports from Canada are currently subject to up to 40% tariffs 
Tariffs have already pushed US lumber prices up by more than 20% since 2021 
Roughly 20% of softwood output supports the paper industry 
EV plant construction is boosting domestic lumber demand 
US hardwood exports are now shifting from China to Europe and Vietnam 
......

Source: insurancebusinessmag.com