US Govt shutdown may increase economic uncertainty for insurers, AM Best says

Written by Adam Cadle

30/09/2025

A US Government shutdown would have an immediate impact on the economy with implication for insurance companies, AM Best has warned.

Funding for the US Government will be cut off at the end of today unless President Donald Trump’s Republican Part can agree with opposition Democrats on a way forward on a spending bill.

AM Best said that while difficult to measure, the longer the shutdown, the more damage it will inflict in direct and indirect economic costs. Consumer sentiment and spending, business hiring and investment decisions would be negatively affected, it stated, and Government spending would slow significantly with a disruption in stock markets also likely.

“The potential government shutdown coincides with increasing evidence of a slowing US economy,” said Ann Modica, director, credit rating criteria, research and analytics, AM Best.

“Annual real GDP growth is expected to decelerate in 2025; inflation has been persistently above the Federal Reserve’s 2.0% target; and more recently, the labour market is showing signs of weakness. Although trade tensions have moderated at times in recent months, they continue to weigh on business sentiment and could further undermine investment and hiring decisions.”

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