Warren Buffett on the risk from Tesla's self-driving tech to Berkshire's insurance businesses

Warren Buffett on the risk from Tesla's self-driving tech to Berkshire's insurance businesses

Warren Buffett, the renowned chairman and CEO of Berkshire Hathaway, has expressed concerns about the potential impact of self-driving cars on the insurance industry. Buffett's apprehensions stem from the fact that autonomous vehicles have the potential to significantly reduce the number of accidents on the road, potentially leading to a decline in demand for auto insurance ([1]).

Buffett's sentiments were echoed during an interview on CNBC, where he stated, "I think the answer is yes. There's no question. Anything that makes cars safer is very pro-social, and it's bad for the auto insurance industry" ([1]). The Oracle of Omaha has made similar remarks in the past, acknowledging the potential benefits of autonomous vehicles but expressing skepticism about their widespread adoption in the near future.

According to a report by The Verge, Buffett's concerns extend to Berkshire Hathaway's insurance subsidiary, Geico. The company generates a substantial portion of its revenue from auto insurance, and Buffett believes that the advent of self-driving cars could negatively impact Geico's financial performance ([2]).

The insurance industry as a whole appears to be grappling with the potential implications of autonomous vehicles. A survey conducted by KPMG found that the majority of insurance executives do not expect self-driving cars to have a significant impact on their businesses until at least 2025 ([1]). However, some experts, like KPMG principal Jerry Albright, argue that the disruption to the insurance industry will happen sooner than many expect ([1]).

Despite the uncertainties surrounding the timeline and extent of the disruption, it is clear that Warren Buffett, one of the most influential figures in finance and business, views the rise of self-driving cars as a potential threat to Berkshire Hathaway's insurance businesses.

References:

[1] "Self-driving cars will be bad for insurance, Buffett says" (https://www.insurancebusinessmag.com/us/news/breaking-news/selfdriving-cars-will-be-bad-for-insurance-buffett-says-31291.aspx)

[2] "Warren Buffett: Self-driving cars will hurt auto insurers like Geico" (https://www.theverge.com/2016/5/2/11565272/warren-buffett-geico-self-driving-cars-insurance-liability)