Berkshire Hathaway Chair Warren Buffett and Vice Chair Ajit Jain admit that GEICO ranks behind Progressive in its ability “match rate to risk,” but both competitors will soon surpass State Farm and Allstate in business volume, Buffett says.
Executive SummaryWarren Buffett and Ajit Jain disagree on whether it makes sense to write insurance on a unique deal that would have Elon Musk's Tesla paying the premium but both agree that GEICO has some ground to make up to catch Progressive on pricing auto insurance and that the insurance cost of the pandemic to Berkshire and the industry is likely to go up. Here, Carrier Management captures the insurance-related highlights of Berkshire Hathaway's four-hour annual meeting last Saturday and provides the numbers to track the race between GEICO and Progressive to the top of premium growth and profit leaderboards.
Speaking during the Berkshire annual meeting last Saturday, Buffett repeated a forecast he made two years ago when he said that either Progressive or GEICO would rise to the top of auto insurance premium rankings within five or 10 years.
“I will predict that five years from now, it’s very likely the top two will be GEICO and Progressive. In which order, we’ll see,” Buffett said at this year’s event, revising the ascension timeline.
Both Buffett and Jain said that GEICO has some ground to make up when it comes to pricing accuracy, as the two men responded to a shareholder question about why GEICO operates at a lower profit margin than Progressive.