Berkshire Hathaway’s operating profit fell by 14% in the first quarter, while the company’s cash reserves reached a record high. During Berkshire’s annual meeting, shareholders showed significant interest in the insurance segment, particularly regarding how self-driving cars will revolutionize the auto insurance industry.
Insurance head Ajit Jain and CEO Warren Buffett addressed a question about the impact of autonomous vehicles on car insurance. Jain stated, “There’s no question that insurance for automobiles is going to change dramatically once self-driving cars become a reality.” He further explained that the major shift will be in identifying and assessing risk factors. Currently, most auto insurance policies revolve around operator errors, their frequency, severity, and the resulting premiums charged.
The transition to self-driving cars is expected to dramatically alter this landscape. As Jain noted, the nature of insurance will change as the primary factor influencing premiums shifts away from human error. This development has significant implications for the insurance business, potentially leading to more accurate risk assessment and pricing models.
