Berkshire, Cyber Risk and the Strait of Hormuz: Insurability Hinges on Price

Why It Matters

The comments reveal Berkshire’s disciplined underwriting approach, signaling potential future capacity in high‑risk marine and cyber markets while underscoring the incremental role of AI in boosting efficiency without replacing expert judgment.

Key Takeaways

• Berkshire will write Strait of Hormuz coverage only at acceptable price.
• Current marine capacity stems from insurers seeking to deploy excess capital.
• Cyber insurance remains unattractive due to low premiums and modeling uncertainty.
• Jain predicts Berkshire may enter cyber market when pricing matches risk.
• AI improves risk triage but won’t replace human underwriting soon.

Pulse Analysis

Berkshire Hathaway’s insurance arm reiterated a timeless principle at its 2026 annual meeting: price must reflect risk before the conglomerate commits capital. Ajit Jain, vice‑chair of Berkshire’s insurance operations, explained that while there is a clear need for coverage of vessels stranded in the Strait of Hormuz amid the Iran‑related conflict, the company will only write policies if the premium adequately compensates for the geopolitical volatility. He noted that other large insurers are currently offering capacity simply to put excess capital to work, but Berkshire remains disciplined, waiting for a price that satisfies its risk‑adjusted return criteria.

The discussion then turned to cyber insurance, a line of business that Jain described as “fashionable” yet financially unattractive. Premiums have been trending downward because the market has seen few large losses, and insurers lack robust models to gauge aggregate exposure across interconnected digital threats. Consequently, Berkshire has stayed on the sidelines, preferring to avoid a market where price erosion could erode profitability. Jain hinted that a shift could occur if pricing aligns with the true risk profile, suggesting that a future entry point may emerge once actuarial confidence improves and demand outpaces supply.

Artificial intelligence was another focal point, with CEO Greg Abel highlighting how AI tools are already boosting underwriters’ productivity at GEICO and within Berkshire’s broader insurance platform. Jain acknowledged that AI can quickly surface a broader set of risks beyond the traditional top‑five, yet he remains skeptical that algorithms will soon replace human judgment in pricing or claim settlement. This balanced view reflects an industry‑wide tension: leveraging technology for efficiency while preserving the nuanced expertise that underpins accurate risk assessment. Berkshire’s cautious yet progressive stance signals that AI will augment, not supplant, its underwriting core.