How Insurance Became Such A Big Deal For Berkshire

To understand how Berkshire Hathaway has grown into the giant conglomerate it is today and turned Warren Buffett into one of the world’s richest people, you must understand how the group’s insurance business works. Berkshire’s insurance divisions are the engine rooms of the group. They have thrown off tens of billions of dollars in profits for the business over the past five decades without including any contribution from the insurance ‘float.’ The ‘float’ is what makes these businesses so unique. Insurers aggregate risk. They take premiums from customers, with each premium priced on the probability of the risk insured occurs….