Berkshire Hathaway’s New THREE Policy: An Inferior Product?

    Posted by MAIA on March 6, 2019

    In this IA Magazine article, author Chris Boggs of the Big “I” Virtual University calls Berkshire Hathaway’s recently announced THREE policy “a dangerous attempt to simplify multiple insurance contracts for small business owners.”

    Warren Buffett Champions an Inferior Product

    Warren Buffett, often ahead of the curve, sounded like a disrupter in a 2004 shareholder letter. Fifteen years ago, Buffett wrote, “Insurers have generally earned poor returns for a single reason: They sell a commodity-like product. Policy forms are standard, and the product is available from many suppliers, some of whom are mutual companies ('owned' by their policyholders rather than stockholders) with profit goals that are limited. Moreover, most insureds don't care from whom they buy. Customers by the millions say, 'I need some Gillette blades' or 'I'll have a Coke,' but we wait in vain for 'I'd like a National Indemnity policy, please.' Consequently, price competition in insurance is usually fierce."

    Although his statements contain fundamental flaws, Buffett thinks he has found the answer to the perceived problem and has joined the “Disrupter League" (yes, this is a made-up term). ­Berkshire Hathaway recently announced the launch of THREE…




    Topics: The Massachusetts Agent, Industry News

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