By Chris Munro

May 8 - (The Insurer) - Kemper Corporation chief Joseph Lacher has sought to allay concerns about possible impacts on the company’s auto-heavy portfolio from President Donald Trump’s trade policy and insisted the tariffs will not materially affect earnings.

Discussing the Chicago, Illinois-based company’s Q1 2025 earnings on Wednesday evening, Kemper’s president and CEO Lacher cited various reasons why the business is “reasonably tariff resistant” and “well positioned to successfully navigate these interesting times.”

Insurance industry commentators have suggested that those carriers whose books have large auto components would be most affected by the tariffs given the additional costs that could arise with car parts being imported from around the world.

Of the $1.06 billion of earned premiums that Kemper booked during 2025’s first quarter, $962.2 million came from its personal and commercial automobile portfolios.

“To be really clear, because a lot of folks have been nervous about this, given all of the attributes of our book and our starting points, we just don't see the tariffs to be a material earnings impact,” stated Lacher.

“We think they're going to be within our normal view of what loss cost trend could be and will be handled with normal, ordinary course rate changes and rate filings,” the executive said.

Lacher said Kemper is entering the potentially tariff-disrupted macro environment from a position of strength.

“The competitive advantages of our specialty business provide tariff resiliency," he said.

During the call, Lacher noted that Kemper had been assessing the possible impact of tariffs for some time.

“The president made clear his affinity for tariffs while on the campaign trail. As such, we've been taking their potential impact into account since his election last November,” said Lacher.

The executive explained that tariffs do not change long-term ongoing inflation, but rather have a one-time upward movement.

“Tariff delays, existing parts inventories and similar factors should spread the loss cost impact over several quarters, allowing for a reasonable response time,” he said.

At the same time, tariffs principally impact the vehicle damage aspect of auto loss costs, and not bodily injury. Around half of Kemper’s loss costs relate to bodily injury, said Lacher, are those are therefore not tariff affected.

“Of the half related to vehicle damage, about two-thirds of that is related to the vehicle itself and replacement parts. The balance relates to things like body shop labor rates, rental car expenses, towing charges and other non-part costs," he said.

“Together, this means that only about one-third of our loss costs are directly exposed to potential tariff-related cost increases.”

Lacher said that weighting is both driven by and further enhanced by the nature of Kemper’s specialty auto book of business.

Around half of the carrier’s customers buy liability-only coverage, and the bulk of its clients purchase policies with minimum limits, further capping the company’s exposure to third-party damage.

Kemper’s chief also pointed to the company’s “very strong position,” evidenced by its low 90s combined ratio and significant growth, as another reason why it is insulated from the impact of tariffs.

“We are very well prepared to navigate the pressure and remain within our long-term margin and growth ranges,” said Lacher.

Kemper can also quickly respond to any impact from the tariffs on its loss costs by how its policies are sold, Lacher said.

For example, in its private passenger auto portfolio, Kemper has utilized six-month policy terms on over 90% of its in-force and 95% of its new business policies.

“There's broad market awareness, including with the insurance departments, of tariffs and their potential impact on loss costs,” said Lacher.

“This impact will be readily visible, and we are confident that insurance departments will respond appropriately with ordinary course rate filings,” he added.