Munger's 2023 Self-Insurance Advice Cost Berkshire Float, Not Fees

Charlie Munger, late vice chairman of Berkshire Hathaway (BRK.A, BRK.B), told Daily Journal Corporation's (DJCO) February 2023 annual meeting that wealthy individuals should self-insure rather than buy insurance, a stance he acknowledged worked against Berkshire's own insurance operations. "If you can afford to self-insure, then self-insure," Munger said, adding that buyers are "paying for the other fellow's frauds." Berkshire owns GEICO outright and holds roughly $164 billion in insurance float, the premium pool it invests before claims are paid. The group posted an underwriting loss in 2022 as GEICO slumped on rising claim frequency and severity. Munger's advice has limited applicability: mortgage and auto lenders typically mandate coverage, and most states require liability insurance to drive legally. U.S. homeowners premiums are projected to rise about 4% in 2026 to roughly $3,057, according to Insurify, up nearly 46% since 2021.