"Berkshire’s Munger Says Insurance Prices May Decline" (WSC; BRK.B; BRK.A)

Somebody sharp at Bloomberg.
We've been skirting around the insurance pricing issue for a couple months* now, they just jump right in.
From BusinessWeek:
Berkshire Hathaway Inc.’s Charles Munger, who has helped Chairman Warren Buffett reduce the firm’s reliance on insurance sales, said declines in policy prices may continue, even as the economy shows signs of recovery.

“I would not bet the farm” on price increases, Munger said yesterday in Pasadena, California, at a shareholders’ meeting of Berkshire’s Wesco Financial Corp. “It’s so easy to under-price and under-reserve.”

Buffett, 79, scaled back coverage of natural disasters in the last two years and invested Berkshire’s cash in bank shares and the $27 billion takeover of railroad Burlington Northern Santa Fe Corp. Munger, who oversees businesses insuring banks and airlines as Wesco’s chairman, pushed Buffett to buy a stake in Chinese automaker BYD Co. in 2008. U.S. commercial insurance rates have fallen since 2004 as carriers compete for business.

“We’re more tough minded” than rivals who cut prices, said Munger. “Berkshire is different.”>>>MORE

*For example, one of the more recent iterations, April 23rd's "Insurance: Catastrophe! Travelers Reports- '“Weather had a big impact on our results,”' (TRV)":

...When we posted "Berkshire Hathaway's "Buffett Picks Insurer Cooperation Over Competition " (BRK-B; BRK-A)" on Feb 26 I said:

This is worth keeping an eye on. After a hurricane season with no U.S Atlantic or Gulf landfalls catastrophe bonds scored big and the reinsurers pocketed a bunch of premiums. The state of Florida's decision to self-insure also worked out.

This year may not have as favorable an El Nino/Southern Oscillation, I'll post the latest NOAA advisory after the headline story....

The question of course was:
Why is Mr. Buffett buying equity in reinsurers rather than writing the business himself?
The quick and dirty answer is: He likes to get paid for the risk....