Financial Results
Berkshire Hathaway insurance earnings fall 14% as Geico profit drops
Berkshire Hathaway’s insurance underwriting earnings declined 14% to $2.18 bn in Q2 2026, despite a 16% increase in group operating earnings and net earnings of $25.7 bn.
Geico’s pre-tax underwriting profit fell 45.4% to $994 mn as auto claims frequency and severity increased, particularly for bodily injury coverage. Berkshire Hathaway Primary’s underwriting earnings surged 333% to $273 mn, while P&C reinsurance earnings rose 8.9% to $1.14 bn, supported by favorable reserve developments.
Berkshire Hathaway reported a 14% decline in insurance underwriting earnings to $2.18 bn in the second quarter of 2026, as rising auto insurance claims costs weighed on Geico’s profitability.
The results, released on August 8, contrasted with stronger performance across the conglomerate, where operating earnings increased 16% and net earnings more than doubled to $25.7 bn.
Geico accounted for much of the weakness. The personal auto insurer’s pre-tax underwriting profit fell 45.4% year over year to $994 mn, according to The Insurer, reflecting higher claims frequency and severity.
During the first six months of 2026, private passenger auto claims frequency increased between 5% and 7% for bodily injury coverage compared with the corresponding period in 2025. Property damage and collision claims frequency rose between 3% and 5%.
J.P. Morgan forecasts 20% drop in property cat reinsurance rates
J.P. Morgan expects property catastrophe reinsurance rates to decline by 120% at January 2027 renewals, although the pace of reductions could moderate after accelerating throughout 2026.
Insured catastrophe losses totaled approximately $15 bn in Q2 2026, marking the fifth consecutive quarter below $20 bn, while outstanding catastrophe bond capacity exceeded $61 bn.
J.P. Morgan expects property catastrophe reinsurance rates to fall up to 20% at the January 2027 renewals, with continued pressure from abundant capital, relatively low catastrophe losses and increasing competition. Gallagher Re estimates that the global reinsurance industry would need to experience an additional $50-75 bn in catastrophe losses during the second half of 2026 to bring returns down to the market’s cost of equity for the year.
Reinsurance pricing remains under pressure across property catastrophe and specialty lines. J.P. Morgan expects further declines unless a sufficiently large catastrophe event occurs late in 2026 alongside significant capital market volatility.
Claims
Insurer Group Ties Rising Repair Costs to ADAS, Parts, and Repair Data Access
ADAS on newer vehicles, along with sensors and other onboard electronics, require more parts, more highly trained technicians, and added scans and calibrations, raising ADAS repair costs, according to a white paper dated September 2026 from the American Property Casualty Insurance Association (APCIA).
The paper is titled "A New Road Ahead for Auto Insurance: Safer Vehicles, Higher Claim Costs?" It found that the severity of paid vehicle damage claims, a category combining property damage liability and collision coverage, climbed 42.3% between 2020 and the four quarters ending in the third quarter of 2025. Claim frequency for the same coverages, measured per 100 vehicles insured for a full year, increased 1.4% over that period. APCIA drew those figures from the Fast Track Monitoring System through ISS Fast Track Plus.
"As vehicles become more complex, access to repair tools, parts, and data becomes increasingly critical to controlling costs," the paper states.
APCIA wrote that barriers to obtaining repair information, tools, and parts can reduce competition, slow repairs, and raise costs for consumers and insurers.
Research
Price still rules, but insurance shoppers in 2026 want more than a bargain
Insurance shopping may be increasingly digital, but consumers are still looking for many of the same things they have always valued from their insurance providers: a competitive price, appropriate coverage and confidence that the insurer will be there when it matters.
New YouGov Profiles data suggests nearly half of Americans — 46% — intend to purchase at least one type of insurance during the next 12 months. For insurers, that represents a substantial pool of potential customers, but also a competitive environment in which consumers have more ways than ever to compare providers, research their options and seek recommendations.
Price remains the most powerful influence on the decision. Among Americans involved in the insurance-buying process, 70% say low prices or premiums are important when choosing a provider. But affordability is only part of the equation. Nearly six in 10 consumers also want coverage that meets their needs, underscoring that buyers are not simply looking for the cheapest policy; they are weighing the value they believe they will receive.
Fire Remains Costliest Cause of Business Interruption Globally as Claim Severity Surges
Average business interruption claims now run 70% higher than property damage claims and continue rising sharply, Allianz Commercial found.
By the numbers:
- Average business interruption claim value exceeds €850,000 ($952 million), about 70% higher than property damage claims.
- Fire and explosion account for over 40% of total claims value analyzed, roughly €2.9 billion ($3.25 billion).
- Natural catastrophes represent 34% of claims value and 26% of claims by frequency.
- Non-natural catastrophe causes drove 66% of claims value and 74% of claim numbers over five years.
What they’re saying:
“The scale of physical damage alone no longer determines the ultimate cost of a business interruption,” said Thomas Lillelund, CEO of Allianz Commercial.
The takeaway: Fire remains the costliest cause of business interruption worldwide, and even contained incidents can cascade into massive losses when critical operations or suppliers are disrupted.
AI in Insurance
Scale or Stall? Successful AI in Claims Depends on Readiness
Will Your Claims AI Scale or Stall? A 7-Dimension Test to Find Out
The 7-Dimension Test to Find Out
Most insurers now agree on the destination for claims AI: faster cycle times, lower leakage, better fraud detection, and more consistent decisions. The harder question is why so many initiatives that perform well in a pilot never make it into production.
That question was the focus of a recent live webinar by Sprout.ai, “Will Your Claims AI Project Scale or Stall? Take the Test.” The session brought together claims, innovation, and technology leaders from carriers, MGAs, and TPAs. It was built as an interactive panel discussion, with attendees sharing their own perspectives through live polls throughout.
The panel started from a simple premise: claims AI projects rarely stall because the technology cannot work. They stall because one operational link is weak.
Viewpoint: The One Thing Holding Back Insurers’ AI Efforts
Insurers have been racing to adopt AI tools over the past 24 months. However, just like organizations in other sectors, most insurance companies have just like organizations in other sectors, most insurance companies have struggled to turn these investments into the transformational benefits leaders initially envisioned
Across industries, the common culprit is data. AI tools are only as good as the information they can access, and many organizations’ data environments are siloed, outdated, duplicative and incomplete.
For insurers, much of that data problem is actually a document management problem. Insurance organizations run on documents, but for decades, document management platforms have largely functioned as repositories. Rather than providing intelligent information management, many of these platforms have essentially become dumping grounds for redundant files and outdated drafts with inconsistent retention practices.
What AI transformation really means for insurance jobs and skills
As advances in artificial intelligence create new roles in the insurance industry and transform more traditional ones, industry experts say the key skills needed in this new age are more about practical application of AI rather than just being able to use technology itself.
Lokesh Vijay Kumar, senior manager of staff software engineering at Geico, said prompting techniques have become “table stakes” in today’s world.
Speaking based on his experience and not representing Geico’s position, he said, “Those skills do matter, but the more durable skill” is being able to “understand the risks, what are the edge cases, what behaviors did we have in our existing systems and understand dealing with customers, and then determine whether that AI adoption is going to produce the right outcome for us.”
He said that teaching someone a new tool “relatively quickly” is quite possible. But, with AI developing at such a rapid pace, new tools are also replaced or changed just as fast. On the other hand, he said, “it’s much harder to teach years of business context and judgment.
“I would say those skills will really survive the next model or tool change, and I would say the goal shouldn’t be to create thousands of prompt engineers. That’s not what we really want. It should be to create a workforce that knows how to work effectively and responsibly within the AI space, and at a faster pace,” Kumar said.
Cyber Risk
Travelers, Nationwide Studies Highlight AI-Driven Cyber Liability Challenges
Business concerns about cyber threats are rising. At the same time, businesses are embracing artificial intelligence (AI) faster than they are enacting formal rules around its use.
Artificial intelligence (AI) is creating opportunities for businesses while giving cybercriminals new ways to exploit them. Two recent studies from Travelers and Nationwide examine both sides of that story, showing that businesses are increasingly alert to cyber threats but often lack the policies, employee training and incident response plans needed to keep pace with AI’s rapid adoption.
According to the 2026 Travelers Risk Index, cyber threats rank as the top overall business concern for the fifth time in eight years.
The study found that companies are more knowledgeable about cyber threats, more confident and taking more preventive steps than a year ago. Yet, vulnerabilities remain, especially as AI becomes embedded in everyday operations.
Announcements
Tesla Drops ‘Self-Driving’ Branding to Appease Europe Regulators
Tesla Inc. is backing away from its Full Self-Driving branding to help secure approval for the driver-assistance system in Europe, distancing the company
Tesla Inc. is backing away from its Full Self-Driving branding to help secure approval for the driver-assistance system in Europe, distancing the company from a name that has drawn criticism as dangerously misleading.
The automaker has begun using the name “Tesla Assisted Driving” on its European websites in recent days. The US version of the same site is continuing to use “Full Self-Driving (Supervised)” for the technology.
Commentary/Opinion
Why a Great Strategy Isn't Enough
It's planning season. Across the insurance industry, leadership teams are discussing next year's strategy, budgets are being drafted and reviewed, boards are being briefed on strategic direction, and managers are scheduling meetings with their teams to set goals. Most of the big decisions that determine how next year evolves have either been made or will likely be made over the next few months.
We've all seen what happens next. The board approves the strategy, but by first quarter next year, little has changed. Usually, the strategy isn't the problem. More than likely, the heavy lifting of operationalizing the strategy wasn't prioritized.
I've spent more than 20 years in the insurance industry working in the space between a senior executive decision and the work that follows. And if I've learned anything, it's that the time to operationalize strategy is before you approve the plan, not after. That's how you get a clearer understanding of the financial and resource commitment you're about to make.
Donna Pobiner is an independent advisor and the founder of Offscript, LLC
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