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The January Consumer Price Index (CPI) data released on Wednesday showed that auto insurance costs rose 2% from the month prior. This jump adds to a double-digit year-over-year gain.
Bloomberg Intelligence senior analyst Matthew Palazola joins Josh Lipton on Asking for a Trend to discuss the pricing dynamics in auto insurance, the impact of tariffs, and the factors determining insurance costs.
Palazola says that around 55% of imported auto parts come from Mexico and Canada, meaning Trump's proposed tariffs will impact repair costs. He highlights Allstate (ALL) and Progressive (PGR) as two insurance companies with the biggest exposure to the auto insurance industry, noting that Progressive is better positioned to deal with changes.
The analyst says, "Should these tariffs not come into effect, you're probably going to see some price competition, probably in the second half of 2025 ... you may see auto insurance come down a little bit in the second half."
Watch the video above to hear more from the analyst.
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This post was written by Naomi Buchanan.