Author: Dom Horton
Article 2 of 5
Trade disruption is creating serious insurance gaps across PE portfolios.
With tariffs rewriting Supply Chains, insurance programmes are failing to keep up.
One in four UK manufacturers have reported balance sheet losses linked to US tariffs. Eight in ten have been impacted by tariffs of some form. The EU has proposed slashing its steel import quota by 47% with a 50% tariff on excess imports from June 2026. For PE firms with portfolio companies in manufacturing, food production, or distribution, this isn’t a trade policy story. It’s an insurance story.
The pace of change is the problem. Tariff policy is shifting quarterly, and businesses are reshaping their supply chains in response. Each adjustment creates a potential mismatch between how the business operates and what its insurance programme actually covers.
Supply Chain Pivots Create Insurance Gaps
When a portfolio company changes suppliers, shipping routes, or warehousing arrangements in response to tariffs, the existing insurance programme becomes misaligned. These changes happen fast, driven by commercial urgency, and insurance is rarely part of the conversation.
Product liability may not extend to goods sourced from a new jurisdiction with different regulatory standards or quality control frameworks. A supplier switch from a well-regulated market to one with less stringent oversight can invalidate assumptions baked into the existing policy.
Cargo and transit insurance may not cover new, more complex routes with additional transhipment points. Longer or more fragmented shipping routes increase the risk of damage, theft, and delay – none of which may be reflected in current coverage limits or territorial scope.
Business interruption cover may not reflect new single-source dependencies created by tariff-driven restructuring. If a company consolidates supply to avoid tariffs on one jurisdiction but creates a concentration risk elsewhere, the BI policy may not respond if that single source fails.
Stock throughput policy limits may be exceeded where companies are stockpiling goods to beat tariff deadlines – nearly a quarter of manufacturers did exactly this in early 2025. Warehouse values can spike well beyond declared limits, leaving the excess entirely self-insured.
The W&I Angle
Supply chain insurance gaps don’t just hit the P&L. W&I underwriters assessing a target will review the adequacy of the insurance programme as part of their underwriting process. If it doesn’t reflect the business’s current operations, the underwriter may restrict coverage or increase retentions. At exit, the buyer’s DD team asks the same questions. Poor answers create friction, weaken the seller’s negotiating position, and reduce the price.
There’s a compounding effect too. If a warranty in the SPA states that the target maintains adequate insurance, and the insurance programme hasn’t kept pace with operational changes, that warranty may itself be breached – creating exposure for the seller even beyond the direct insurance gap.
What to Do
Ask portfolio companies whether they’ve changed suppliers, routes, or sourcing jurisdictions in the past twelve months. If the answer is yes, the insurance programme needs reviewing against the current operational reality.
Include supply chain insurance as a specific DD line item. Understand how the business actually operates today – not how it operated when the policy was last placed – and whether the cover matches.
Factor tariff-driven changes into vendor DD for upcoming exits. If the target has restructured its supply chain in the last two years, the insurance programme should be a priority item for the sell-side advisory team.
VISTA INSIGHT
Every supply chain pivot your portfolio company makes is an insurance event. If cover hasn’t kept pace with strategy, it’s a gap that will be found — either by a loss, or by a buyer’s DD team. Better to find it first.
Want to discuss how this applies to your portfolio?
Get in touch with Dom Horton, Associate Director at Vista Insurance Brokers, for a confidential conversation about your deal pipeline or portfolio insurance requirements.
LinkedIn: Dom Horton | E: dominic.h@vistainsurance.co.uk | M: 07901339510
About Vista Insurance Brokers
Vista is a specialist M&A insurance advisory firm working exclusively with private equity houses, corporate finance firms, and law firms across the UK and Ireland. We advise on over 105 transactions annually, providing insurance due diligence, W&I insurance placement advice, and transactional risk solutions for mid-market deals. Our insurance DD reports are delivered in 5–7 working days on a contingent fee basis – no cost if the deal doesn’t complete.
