(BRKA), (BRKB) – What would a nuclear disaster mean for insurance companies? Warren Buffett intervenes

Russia’s invasion of Ukraine and threats of a possible nuclear war between several countries has been turned into a topic of debate at the annual meeting Berkshire Hathaway Inc. (NYSE: BRK-A)(NYSE: BRK-B) meeting of shareholders. Here’s what Warren Buffett had to say about the risks of nuclear war and what it would mean for insurance companies.

What happened: Buffet Told shareholders of Berkshire Hathaway that the risk of nuclear war is real and worrying. Buffett also said he was happy that during World War II, the United States invented the atomic bomb before other countries.

“It’s a very, very, very, very dangerous world,” Buffett said, citing the large stockpiles of nuclear weapons that countries have.

A question from the audience sparked a debate about the role a nuclear disaster could have on insurance companies, an industry to which Berkshire Hathaway is heavily exposed.

Buffett said Berkshire Hathaway could do little about the risk of nuclear war. Buffett also said nuclear war would impact other insurance industries and make it more expensive for Berkshire to underwrite insurance plans.

“For some things we don’t write policies because we wouldn’t be able to enforce them anyway,” Buffett said.

Vice Chairman of Berkshire Hathaway Ajit Jainwho heads the insurance industry, offered his views on the potential for an incident involving nuclear weapons.

“It’s very difficult for us to estimate how serious this can be,” Jain said.

Jain said it was “pretty positive” that insurance companies could be in line to pay nuclear war damages by regulators and courts.

Unlike earthquakes and hurricanes, which are risks that can be estimated by insurance companies, Jain said the cost of nuclear events is difficult to predict and estimate how severe it could be.

Related Link: Berkshire Hathaway’s Annual Meeting of Shareholders Returns In-Person After Two-Year Break

Why it matters: Besides discussing the risks of nuclear war, Jain also touched on the fact that Geico has fallen behind its rival. progressive society (NYSE: PGR) in the auto insurance industry.

“Each has its pros and cons, but that said, there’s no doubt Progressive has done a much better job of late than Geico,” Jain said.

Jain credited Progressive with being at the start of telematics, which involves putting a device in a vehicle that tracks driving habits and then offering lower rates for safer driving behavior.

“It will take some time, but hopefully within a year or two Geico will be able to catch up with Progressive,” he added.

Photo: Courtesy of Fortune Live Media on Flickr

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Kristan F. Talley