Topline
Geico, Berkshire Hathaway’s largest insurance business, saw earnings decline nearly 45% last quarter as American drivers filed more auto claims and injury costs sharply spiked, delivering a hit to the conglomerate’s most profitable sector.
Key Facts
Geico’s loss ratio—the share of premiums paid out in claims—rose to 76.6% in the second quarter and 75.3% for the first half of 2026, up nearly five percentage points from the same periods a year earlier.
The filing says the number of bodily injury claims rose 5% in the first half of 2026 and injury claim costs on average jumped 10%, both measures worsening when compared to 2025.
Berkshire’s filing reflects a broader trend in the insurance industry where bodily injury claims have surpassed auto physical damage payouts for the first time in history.
WHY HAVE BODILY INJURY CLAIMS INCREASED?
CCC Intelligent Solutions, an auto insurance software company, reports bodily insurance claim frequency is up 11% over the past two years and the cost of those claims has jumped 10.3% over the last year and 32% over the last four years. CCC says the increase is not because car crashes are becoming more frequent or more severe, instead pointing to changes in the social environment surrounding injury claims. General affordability, higher medical costs and more aggressive legal strategies have all made alleging injuries and filing lawsuits more attractive, according to industry analyst Erik Bahnsen. In other words, people are more likely to win lawsuits and, in doing so, can avoid shouldering the burden of medical costs on their own. For insurance companies, those bodily injury claims are becoming more expensive due to higher rates of attorney involvement, longer negotiations, higher legal fees and rising health care expenses.
SURPRISING FACT
While the number of bad car accidents hasn’t substantially changed, the number of minor ones has. What are known as Advanced Driver Assistance Systems, like automatic emergency braking, have successfully cut down on the number of minor, low-speed fender benders. And because there are fewer of those lower-severity collisions, the remaining claims pool is disproportionately weighted toward more intense crashes that may result in physical injuries.
Key background
Geico was one of Berkshire Hathaway’s strongest performers heading into 2026, recovering from a period of underwriting losses that prompted significant cost cuts and premium increases in previous years. That turnaround made this year’s second-quarter reversal even more striking when underwriting expenses at Geico surged about 28% in the first half of 2026 versus a year earlier. The filing discloses no significant catastrophe losses in the first half of 2026, meaning the Geico deterioration is purely operational rather than weather-driven. Berkshire’s broader operations held $359.2 billion in cash and Treasury bills as of June 30 and generated about $177.5 billion in insurance float—a financial cushion that masks how sharply Geico’s underwriting performance has deteriorated.
FORBES VALUATION
Warren Buffett, the investor known as the “Oracle of Omaha,” is worth an estimated $151.4 billion as of Monday, making him the 10th-richest person in the world. Buffett took control of Berkshire Hathaway in 1965 and turned the struggling textile company into a giant holding company, of which he was CEO until stepping down in December at age 95. He remains chairman of the board.