Here's a thought from the owner of one of the largest U.S. auto insurers, GEICO.
Via the DealBook liveblog:
2:35 P.M.A Big Threat: the Self-Driving Car
Mr. Sorkin asks about Geico and how it might do if the self-driving car — the dream of Google and innumerable technology aficionados — takes off.Mr. Buffett emphasizes that if such a car succeeds, it will be good for society. It will be bad for auto insurers like Geico, however.
That said, Berkshire won’t sell Geico anytime soon.And MoneyBeat:
- 1:33 pm
- Future of Car Insurance
- by Erik Holm
Andrew Ross Sorkin shares a question from an investor wondering about Geico’s views on telematics and self-driving cars. Both are hot topics in the auto-insurance industry.
Two years ago, Buffett said he didn’t see what the big deal was with usage-based insurance, where insurers use a small device to evaluate how policyholders drive and adjust the price of coverage accordingly. By not publicly saying that it was looking at the technology, Geico stands in stark contrast to all the other major US auto insurers.
Buffett says he still feels Geico can do just fine without it, but sounds more open to the idea of giving the technology a look.
“We think we have a pretty good system but we’ll continue to look at many variables,” he said. “I feel very very very good about Geico, Geico’s management and it’s ability to evaluate risk….In my view, there’s nobody better.
But Buffett and Munger both say self-driving cars represent “a real threat to the auto insurance industry,” presumably because accidents, and therefor premiums, will fall.
“It will be very good for society and it will be very bad for auto insurers,” Buffett says.
But Munger says that adoption of the technology may take longer than people think.
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