Ajit Jain responds to how he runs the insurance business and what AI can do | Berkshire AGM 2026

Añadido: 2026-05-10

[00:00:00]Ajit Jain has been described by Warren as irreplaceable. He's helped build one of the greatest insurance operations in history and has been the backbone of Berkshire's underwriting discipline.

[00:00:11]So, in terms of the culture and the underwriting orientation, which is so critical, there are a few simple rules that I've followed over the years.

[00:00:26]And it's come at a cost, but I think net net it's still a positive. Let me just lay it out in terms of how I think about this issue.

[00:00:34]Firstly, we have a very small number of people who actually get involved in the decision-making.

[00:00:43]My top three lieutenants in my reinsurance operation, forgetting about companies that we acquire, we have been together for 35-plus years now.

[00:00:55]And we become friends. We And the And the other thing to minimize any kind of competition among these people and stepping on each other's toes, we have a compensation plan that gives fixed salaries, fixed compensation to the individuals as opposed to having some complex formula that results in they get the upside and Berkshire gets the downside.

[00:01:21]Uh [clears throat] I try and stay away from that as much as possible. It's really a problem with all the compensation plans I've seen.

[00:01:29]>> [clears throat] >> Um Then the other thing that is important is is people need to have experienced uh going through a tough time and the fact that it doesn't penalize them.

[00:01:47]We insulate them from the ups and downs of the marketplace so that they feel secure and they do the right thing.

[00:01:54]And yeah, so those are the elements that I think allow us to have a long-term orientation and not get sucked into the latest fashion of the year. Right.

[00:02:06]>> and just do stuff for the sake of doing.

[00:02:09]Your compensation question is such a a critical point issue. Yeah, right.

[00:02:15]Yeah, the compensation thing, having seen all these programs over the years, I remember having mentioned to Warren at some point in time, I said, "Warren, you give me a compensation plan and I'll game it.

[00:02:25]You'll not be able to figure it out for years down the road."

[00:02:29]Uh and that's the problem, together with the fact that if the employees lose, they want to go back and renegotiate the plan. And if they win, they're happy to walk away with everything.

[00:02:42]Uh so, that's the big challenge.

[00:02:45]There won't be a there won't be anything in AI that replaces the gene. So, AI also is very fashionable right now.

[00:02:55]Uh people are jumping into it in the from the insurance space and from the non-insurance space.

[00:03:01]And clearly, if AI becomes reality as is being projected, then there's no question about it, it'll be a huge game changer.

[00:03:12]Right now, what we are seeing is AI being used as a productivity tool, as a mechanism for reducing uh labor costs and and doing routine repetitive things.

[00:03:28]I do not think AI will reach a point where you can make a trade-off on things like pricing, settling a claim. Uh that is still years away and you know, I tend to be skeptical. I'll be surprised if AI can solve that problem for you.

[00:03:51]>> [music] [music] >> Oh.