Higher GEICO claims losses welcome for boosting premiums
More claims aren’t a bad thing for Geico.
The more claims that they have had, the more that they have made thanks to raised premiums, according to the leader of Geico, Warren Buffet.
The company is doing about $23 billion in business each year. This means big bucks for the subsidiary of Berkshire Hathaway. In essence, the more they pay out in claims, which have increased each year due to inflation and rising repair costs, the more they are able to make by raising their premium rates.
These higher premiums are known as “float”.
This money is used to invest more in the business or buy even more companies. Warren Buffet even praised the current business strategies of the company by the ability to raise insurers premiums quickly as a response to the current market conditions.
It’s no surprise that a company that has billionaire Warren Buffet involved with it would figure out a way to make more money as they are having to spend more than they did in the past.