Buffett Cautious on Cyber Insurance Because No One Knows Risks

(Bloomberg) -- Warren Buffett said he doesn’t want Berkshire Hathaway Inc. being a leader on cyber insurance because neither he nor others in the industry really know the risk.

"I don’t think we or anybody else really knows what they’re doing when writing cyber" insurance, Buffett said Saturday at his firm’s annual meeting in Omaha, Nebraska. "We don’t want to be a pioneer on this."

Buffett said that cyber risk is part of his estimate that every year carries about a 2 percent chance of a super catastrophe that would cause $400 billion or more of insured losses. While that kind of disaster will wipe out many companies, Berkshire will aim to keep its exposure low enough to remain profitable in such a year, the 87-year-old chairman said.

Buffett said he’s fine with writing some cyber policies to remain competitive, but doesn’t want to be among the top three in the industry. Anyone who claims to know the base case or worst case for losses is “kidding themselves,” he said.

--With assistance from Hannah Levitt and Noah Buhayar

To contact the reporters on this story: Katherine Chiglinsky in New York at kchiglinsky@bloomberg.net, Sonali Basak in New York at sbasak7@bloomberg.net.

To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, Margaret Collins

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