this post was submitted on 20 Apr 2024
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His statement is extremely flawed - insurance companies dream of accepting premiums and never paying out accidents.
He understands there is enough competition in the market that as payouts and accidents go down premiums will have to. There is enough competition they can't just keep rates high they would be undercut and lose customers.
For BH it's doubly bad as the large cash reserves GEICO has to maintain are used to borrow against at very low rates. If those reserves drop he has less to borrow against for investing.
If I wanted to be cynical, it's also that it's a bit different when it's not Average Joe asking for a payout, but Mercedes, for example. It may shift the legal playing field with the insured parties not being consumers, but car manufacturers. Even worse for insurers, car manufacturers would be more successful in negotiating the initial deal as well.
I would agree it’s bad for insurance company employees. But the purpose of an insurance company is to collect premiums and deny claims.
Get hurt in america, your insurer will hold a demo!
When you're clients are a handful of companies who will more aggressively change insurers than consumers to save a penny and have their own legal teams, it becomes harder to price gouge or illegally deny claims.
Yes, clearly Warren Buffet is the one in the wrong here. 🤔