There were examples of contrition in Berkshire’s other businesses, too. Ajit Jain, a vice chairman who runs the company’s insurance operations, said that auto insurer Geico had been late to adopt telematics, the devices used to track drivers and reward them for better behavior.
“Geico had clearly missed the bus and was late in terms of appreciating the value of telematics,” Jain said. “They have woken up to the fact that telematics plays a big role in matching rate to risk.”
In a broader statement on the industry, Jain noted how insurers had underpriced pandemic risks, requiring that they now recalibrate their models. The industry will likely be more sophisticated in thinking about pandemic risk in their entire portfolios, he said.
‘Tape Worm’
Buffett also reflected on the health care venture Berkshire had set up with JPMorgan Chase & Co. and Amazon.com Inc., to attack the “tape worm” of high-costs in the system. The venture ultimately closed this year, and Buffett acknowledged on Saturday the challenges of trying to overhaul an industry with so many stakeholders, and that accounts for a significant part of the country’s gross domestic product.
“We were fighting a tapeworm in the American economy and the tapeworm won,” Buffett said.
The mea culpas were also accompanied by criticisms and quips from both Munger and Buffett. The boom in SPACs, or special purpose acquisition companies, would probably not last, said Buffett, while Munger took aim at cryptocurrencies and the explosion in retail trading. The pair chided professionals that push people who are just following a natural human instinct to gamble.
“That is really waving the red flag at the bull,” Munger said.
This article was provided by Bloomberg News.