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Buffett and Ajit Jain explain why they're staying away from hot cybersecurity insurance industry

One of the messages that Warren Buffett and Berkshire Hathaway’s top insurance executive, Ajit Jain, sent to investors during the company’s annual shareholder meeting in Omaha last month was that cyber insurance, while currently profitable, still has too many unknowns and risks for Berkshire, a huge player in the insurance market, to be fully comfortable underwriting.

Cyber insurance has become “a very fashionable product,” Jain said at the annual meeting. And it’s been a money maker for insurers, at least to date. He described current profitability as “fairly high” — at least 20% of the total premium ending up in the pockets of insurers. But at Berkshire, the message being sent to agents is one of caution. A primary reason is the difficulty in assessing how losses from a single occurrence don’t spiral into an aggregation of potential cyber losses. Jain gave the hypothetical example of when a major cloud provider’s platform “comes to a standstill.”

“That aggregation potential can be huge, and not being able to have a worst-case gap on it is what scares us,” he said.

“There’s no place where that kind of a dilemma enters into more than cyber,” Buffett said. “You may get an aggregation of risks that you never dreamt of, and maybe worse than some earthquake happening someplace.”

Berkshire is in the cyber insurance business

Industry analysts generally say while some of Berkshire’s caution is warranted, the general state of the cybersecurity insurance marketplace is stabilizing as it becomes profitable. And Gerald Glombicki, a senior director in Fitch Rating’s U.S. insurance group, points out that Berkshire Hathaway is issuing cybersecurity policies despite Buffett’s caution. According to Fitch’s analysis, Berkshire Hathaway is the sixth-largest issuer of such policies. Chubb, which Berkshire recently revealed a big investment in, and AIG are the largest.

“Right now [cybersecurity insurance] is still a viable business model for many insurers,” Glombicki said. It is still a tiny market, representing only one percent of all policies issued, according to Glombicki. Because the cybersecurity business is so small, it gives insurance companies latitude to implement various policies to see what is working, and what isn’t, without a tremendous amount of exposure.

Berkshire, as well as Chubb and AIG, declined to comment.

“There is an element of unpredictability that is very unsettling, and I understand where [Buffett] is coming from, but I think it is really hard to avoid cyber risk entirely,” Glombicki said. He added though that there has still been no significant litigation that assigns culpability or tests the boundaries of the policies, and until the courts hear some culpability cases, some insurers may proceed more cautiously.

‘Could break the company’ Buffett says

Top Berkshire executives Warren Buffett (L), Greg Abel (C) and Ajit Jain (R) during the Berkshire Hathaway Annual Shareholders Meeting in Omaha, Nebraska on May 4, 2024.

CNBC

The problem with writing many policies, even with a $1 million limit per policy, is if a “single event” turns out to affect 1,000 policies. “You’ve written something that in no way we’re getting the proper price for, and could break the company,” Buffett said.

While some notable leaders, like former Homeland Security chief Michael Chertoff — who now runs a global security risk management firm — have called for a government cybersecurity backstop of some sort, most experts don’t believe that is needed right now. Glombicki says that while the feds are looking at what role they can play, intervention likely won’t happen until an incident prompts it.

Any government involvement “will probably happen after a big, expensive cyber-incident,” he said. “After September 11, the government put together a terrorist risk program. In cyber, we have not yet seen an attack of that scale. We are still in the stage of thinking about possible approaches.”

Cyber insurance data shows growth and market confidence

While the number of cybersecurity policies being written is small now, analysts don’t expect it to stay that way.

“Rates are declining, which shows stability in the market,” said Mark Friedlander, a spokesman for the Insurance Information Institute. According to its data, cyber premiums are estimated to double over the next decade. In 2022, premiums totaled $11.9 billion. By 2025, Friedlander says, they are expected to double to $22.5 billion and increase to $33.3 billion by 2027.

“This is clearly one of the fastest-growing segments of insurance. More companies are writing cybersecurity policies than ever before,” Friedlander said, attributing confidence among insurers to more sophisticated underwriting and stabilizing rates. He cited a 6% decline in cybersecurity insurance rates in the first quarter of 2024, following a 3% decline in 2024, as a clear signal that insurers feel more confident about jumping into the business.

“Most commercial insurance like auto, home, and life insurance have all been increasing, so the decline is significant. It is a sign of stability and a decline in claims severity,” Friedlander said.

And more insurers are entering the market because they have the tools and data to price the risk. “If you can do it at sound rates, you will write that coverage,”  Friedlander said.

‘You’re losing money’

Buffett and his top insurance lieutenant don’t agree. It’s the insurance “loss cost” — what the cost of goods sold could potentially be — that has Berkshire on the fence with a bigger move into cyber insurance. Jain said losses have been “fairly well contained” to date — not exceeding 40 cents on the policy dollar over the past four to five years — but he added, “there’s not enough data to be able to hang your hat on and say what your true loss cost is.”

Jain said that in most cases agents are Berkshire are discouraged from writing cyber insurance, unless they need to write it to satisfy specific client needs. And even if they do, Jain leaves them with this message: “No matter how much you charge, you should tell yourself that each time you write a cyber insurance policy, you’re losing money. We can argue about how much money you’re losing, but the mindset should be you’re not making money on it. … And then we should go from there.”

Google Cloud says the risks are being overstated

There is a perception that cyber risk is rapidly changing and, therefore, too unpredictable to underwrite in a systematic way, says Monica Shokrai, head of business risk and insurance at Google Cloud. But she added that the perception doesn’t match reality, and that the risk can largely be managed.

“We don’t hold the same view as Warren Buffet on the topic,” she said. In Google’s view, the majority of cyber losses can be prevented or mitigated through basic cyber hygiene.  

“By understanding security, you can get to a place where your controls are in a much better place, where the risk is more manageable,” Shokrai said. Devastating attacks from nation-states, meanwhile, are in a separate category and have been rare. Insurers are already inoculating themselves from potential risk by making exclusions for certain catastrophic events. Many cybersecurity policies have coverage exemptions for nation-state attacks.

“What they are trying to do is remain resilient and solvent in the event of a widespread event; what they have done to manage that is put in exclusions,” Shokrai said, and those include critical infrastructure, cyber war, and other widespread disruptive events.

Ambiguities and subjectivities remain. What if someone is the victim of a cyberattack from a foreign-based gang that isn’t officially tied to a nation-state but may have received some ancillary logistical support?  Can an insurance company invoke a nation-state exclusion? Shokrai says categorizing how to attribute an event is the topic of much debate between insurance companies. “That is a big debate between insurance companies; it is an important distinction that needs clarity,” Shokrai said.

Some experts say it is the ambiguity surrounding the industry’s margins that has investors like Buffett and insurance players like Berkshire spooked. But so far, the business has proven to be sound overall. “It is still a viable business model for many insurers,” said Josephine Wolff, an associate professor of cybersecurity policy at The Fletcher School at Tufts University, who has been studying the evolving market for the past several years. But she added that a belief that the business is viable doesn’t mean things are not constantly changing, pointing to the recent ransomware surge over the past couple of years that saw large payouts by insurance companies — though notably still not enough to make the business unprofitable for most issuers.

Cyber insurance helps make the entire ecosystem safer, according to Steve Griffin, co-founder of L3 Networks, a California-based managed services provider that specializes in cybersecurity. Policies require companies to adhere to certain cyber standards to attain coverage, and the more businesses that sign up for coverage, the safer the entire system becomes. And if a business knows they’ll be denied a claim if they don’t have some basic cybersecurity safeguards in place, that acts as an incentive to put them in place.

Berkshire does believe the business will grow, it just isn’t sure at what cost. “My guess is at some point it might become a huge business, but it might be associated with huge losses,” Jain said.

“I will tell you that most people want to be in anything that’s fashionable when they write insurance. And cyber’s an easy issue,” Buffett said. “You can write a lot of it. The agents like it. They’re getting the commission on every policy they write. … I would say that human nature is such that most insurance companies will get very excited and their agents will get very excited, and it’s very fashionable and it’s kind of interesting, and as Charlie [Munger] would say, it may be rat poison.”

While Griffin understands Buffett’s caution, he sees a generational divide over the risk outlook, and is optimistic about the cybersecurity insurance sector.

“Probably Warren Buffet would have called cybersecurity insurance an opportunity when he was younger,” he said.

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

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AI is disrupting the advertising business in a big way — industry leaders explain how

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AI is disrupting the advertising business in a big way — industry leaders explain how

An AI assistant on display at Mobile World Congress 2024 in Barcelona.

Angel Garcia | Bloomberg | Getty Images

Artificial intelligence is shaking up the advertising business and “unnerving” investors, one industry leader told CNBC.

“I think this AI disruption … unnerving investors in every industry, and it’s totally disrupting our business,” Mark Read, the outgoing CEO of British advertising group WPP, told CNBC’s Karen Tso on Tuesday.

The advertising market is under threat from emerging generative AI tools that can be used to materialize pieces of content at rapid pace. The past couple of years has seen the rise of a number of AI image generators, including OpenAI’s DALL-E, Google’s Veo and Midjourney.

In his first interview since announcing he would step down as WPP boss, Read said that AI is “going to totally revolutionize our business.”

“AI is going to make all the world’s expertise available to everybody at extremely low cost,” he said at London Tech Week. “The best lawyer, the best psychologist, the best radiologist, the best accountant, and indeed, the best advertising creatives and marketing people often will be an AI, you know, will be driven by AI.”

Read said that 50,000 WPP employees now use WPP Open, the company’s own AI-powered marketing platform.

“That, I think, is my legacy in many ways,” he added.

Outgoing WPP CEO says AI will 'revolutionize' advertising business

Structural pressure on creative parts of the ad business are driving industry consolidation, Read also noted, adding that companies would need to “embrace” the way in which AI would impact everything from creating briefs and media plans to optimizing campaigns.

A report from Forrester released in June last year showed that more than 60% of U.S. ad agencies are already making use of generative AI, with a further 31% saying they’re exploring use cases for the technology.

‘Huge transformation’

Read is not alone in this view. Advertising is undergoing a “huge transformation” due to the disruptive effects of AI, French advertising giant Publicis Groupe’s CEO Maurice Levy told CNBC at the Viva Tech conference in Paris.

He noted that AI image and video generation tools are speeding up content production drastically, while automated messaging systems can now achieve “personalization at scale like never before.”

Read more CNBC tech news

However, the Publicis chief stressed that AI should only be considered a tool that people can use to augment their lives.

“We should not believe that AI is more than a tool,” he added.

And while AI is likely to impact some jobs, Levy ultimately thinks it will create more roles than it destroys.

“Will AI replace me, and will AI kill some jobs? I think that AI, yes, will destroy some jobs,” Levy conceded. However, he added that, “more importantly, AI will transform jobs and will create more jobs. So the net balance will be probably positive.”

This, he says, would be in keeping with the labor impacts of previous technological inventions like the internet and smartphones.

AI is moving from curiosity to action, Publicis' Maurice Levy says

“There will be more autonomous work,” Levy added.

Still, Nicole Denman Greene, analyst at Gartner, warns brands should be wary of causing a negative reaction from consumers who are skeptical of AI’s impact on human creativity.

According to a Gartner survey from September, 82% of consumers said firms using generative AI should prioritize preserving human jobs, even if it means lower profits.

“Pivot from what AI can do to what it should do in advertising,” Greene told CNBC.

“What it should do is help create groundbreaking insights, unique execution to reach diverse and niche audiences, push boundaries on what ‘marketing’ is and deliver more brand differentiated, helpful and relevant personalized experiences, including deliver on the promise of hyper-personalization.”

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Nvidia-mania took over Europe this week. Here’s what I learned from Jensen Huang

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Nvidia-mania took over Europe this week. Here's what I learned from Jensen Huang

Jensen Huang, co-founder and chief executive officer of Nvidia Corp., left, and Emmanuel Macron, France’s president at the 2025 VivaTech conference in Paris, France, on Wednesday, June 11, 2025.

Nathan Laine | Bloomberg | Getty Images

Nvidia boss Jensen Huang has been on a tour of Europe this week, bringing excitement and intrigue to everywhere he visited.

His message was clear — Nvidia is the company that can help Europe build its artificial intelligence infrastructure so the region can take control of its own destiny with the transformative technology.

I’ve been in London and Paris this week following Huang around as he met with U.K. Prime Minister Keir Starmer, French President Emmanuel Macron, journalists, fans, analysts and gave a keynote at Nvidia’s GTC event in the capital of France.

Here’s the what I saw and the key things I learned.

The draw of Huang is huge

Huang is truly the current rockstar of the tech world.

At London Tech Week, the lines were long and the auditorium packed to hear him speak.

The GTC event in Paris was full too. It was like going to a music concert or sporting event. There were GTC Paris T-shirts on the back of every chair and even a merchandise store.

Nvidia GTC in Paris on 11 June 2025

Arjun Kharpal

The aura of Huang really struck me when, after a question-and-answer session with him and a room full of attendees, most people lined up to take pictures or selfies with him.

Macron and Starmer both wanted to be seen on stage with him.

Nvidia positions itself as Europe’s AI hope

Nvidia’s key product is its graphics processing units (GPU) that are used to train and execute AI applications.

But Huang has positioned Nvidia as more than a chip company. During the week, he described Nvidia as an infrastructure firm. He also said AI should be seen as infrastructure like electricity.

His pitch to all countries was that Nvidia could be the company that will help countries build out that infrastructure.

“We believe that in order to compete, in order to build a meaningful ecosystem, Europe needs to come together and build capacity that is joint,” Huang said during a speech at the Viva Tech conference in Paris on Wednesday.

Jensen Huang, CEO of Nvidia, speaks during the Viva Technology conference dedicated to innovation and startups at Porte de Versailles exhibition center in Paris, France, June 11, 2025.

Gonzalo Fuentes | Reuters

One of the most significant partnerships announced this week is between French startup Mistral and Nvidia to build a so-called AI cloud using the latter’s GPUs.

Huang spoke a lot during the week about “sovereign AI” — the concept of building data centers within a country’s borders that services its population rather than relying on servers located overseas. Among European policymakers and companies, this has been an important topic.

Huang also heaped praise on the U.K., France and Europe more broadly when it came to their potential in the AI industry.

China still behind but catching up

On Thursday, Huang decided to do a tour of Nvidia’s booth and I managed to catch him to get a few words on CNBC’s “Squawk Box Europe.”

A key topic of that discussion was China. Nvidia has not been able to sell its most advanced chips to China because of U.S. export controls and even less sophisticated semiconductors are being blocked. In its last quarterly results, Nvidia took a $4.5 billion hit on unsold inventory.

I asked Huang about how China was progressing with AI chips, in particular referencing Huawei, the Chinese tech giant that is trying to make semiconductor products to rival Nvidia.

Huang said Huawei is a generation behind Nvidia. But because there is lots of energy in China, Huawei can just use more chips to get results.

Nvidia CEO: Huawei ‘has got China covered’ if the U.S. doesn’t participate

“If the United States doesn’t want to partake, participate in China, Huawei has got China covered, and Huawei has got everybody else covered,” Huang said.

In addition, Huang is concerned about the strategic importance of U.S. companies not having access to China.

“It’s even more important that the American technology stack is what AI developers around the world build on,” Huang said.

Just reading between the lines somewhat — Huang sees a world where Chinese AI tech advances. Some countries may decide to build their AI infrastructure with Chinese companies rather than American. That in turn could give Chinese companies a chance to be in the AI race.

Quantum, robotics and driverless is the future

Nvidia boss Jensen Huang delivers a speech on stage talking about robotics.

Arjun Kharpal | CNBC

During his keynote at GTC Paris on Wednesday, he also address quantum computing, saying the technology is reaching “an inflection point.”

Quantum computers are widely believed to be able to solve complex problems that classic computers can’t. This could include things like discovering new drugs or materials.

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Tesla faces protests in Austin over Musk’s robotaxi plans

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Tesla faces protests in Austin over Musk's robotaxi plans

In an aerial view, a Tesla showroom at 12845 N. US 183 Highway Service Road is seen after police were called for a suspicious device in Austin, Texas, on March 24, 2025.

Brandon Bell | Getty Images

With Elon Musk looking to June 22 as his tentative start date for Tesla’s pilot robotaxi service in Austin, Texas, protesters are voicing their opposition.

Public safety advocates and political protesters, upset with Musk’s work with the Trump administration, joined together in downtown Austin on Thursday to express their concerns about the robotaxi launch. Members of the Dawn Project, Tesla Takedown and Resist Austin say that Tesla’s partially automated driving systems have safety problems.

Tesla sells its cars with a standard Autopilot package, or a premium Full Self-Driving option (also known as FSD or FSD supervised), in the U.S. Automobiles with these systems, which include features like automatic lane keeping, steering and parking, have been involved in dozens of collisions, some fatal, according to data tracked by the National Highway Traffic Safety Administration.

Tesla’s robotaxis, which Musk showed off in a video clip on X earlier this week, are new versions of the company’s popular Model Y vehicles, equipped with a future release of Tesla’s FSD software. That “unsupervised” FSD, or robotaxi technology, is not yet available to the public.

Tesla critics with The Dawn Project, which calls itself a tech-safety and security education business, brought a version of Model Y with relatively recent FSD software (version 2025.14.9) to show residents of Austin how it works.

In their demonstration on Thursday, they showed how a Tesla with FSD engaged zoomed past a school bus with a stop sign held out and ran over a child-sized mannequin that they put in front of the vehicle.

Dawn Project CEO Dan O’Dowd also runs Green Hills Software, which sells technology to Tesla competitors, including Ford and Toyota.

Stephanie Gomez, who attended the demonstration, told CNBC that she didn’t like the role Musk had been playing in the government. Additionally, she said she has no confidence in Tesla’s safety standards and said there’s been a lack of transparency from Tesla regarding how its robotaxis will work.

Another protester, Silvia Revelis, said she also opposed Musk’s political activity, but that safety is the biggest concern.

“Citizens have not been able to get safety testing results,” she said. “Musk believes he’s above the law.”

Tesla didn’t immediately respond to a request for comment.

— Todd Wiseman contributed to this report.

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