![Cyber](https://twistity.com/wp-content/uploads/2024/05/markus-spiske-iar-afB0QQw-unsplash-scaled.jpg)
![Cyber](https://twistity.com/wp-content/uploads/2024/05/markus-spiske-iar-afB0QQw-unsplash-scaled.jpg)
Credit: Unsplash
Warren Buffett and Ajit Jain of Berkshire Hathaway expressed concerns about the booming cyber insurance market during the company’s annual shareholder meeting. While currently profitable, they see too many unknowns and risks to fully commit.
Cyber insurance, described by Jain as “a very fashionable product,” has been making money, with insurers seeing up to 20% profit from premiums. However, Buffett and Jain worry about the potential for massive losses from unpredictable events, like a major cloud provider failure.
“There’s no place where that kind of a dilemma enters into more than cyber,” Buffett said, highlighting the risk of aggregated losses from a single cyber incident.
Despite these concerns, Berkshire is still involved in cyber insurance, being the sixth-largest issuer of such policies. Industry experts believe the market is stabilizing and growing, with cyber premiums expected to double over the next few years.
However, Jain advises caution, suggesting that agents consider cyber insurance policies as potential money losers. “No matter how much you charge, you should tell yourself that each time you write a cyber insurance policy, you’re losing money,” he said.
Some, like Google Cloud’s Monica Shokrai, argue that the risks are manageable with proper cybersecurity practices. But the ambiguity in defining and attributing cyber events remains a significant concern.
Buffett summed up the issue by noting that while cyber insurance is popular and agents are eager to sell it, the potential for “huge losses” keeps Berkshire cautious about expanding further into this market.
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