Insurers operating in the London market are being urged to operate simple underwriting principles if they wish to achieve sustainable profits.
Speaking at a conference hosted by Faraday, Warren E. Buffett, chief executive officer of Berkshire Hathaway, said insurers should focus on profit as the measure of success.
He stated that success is dependent on key underwriting principles. Amongst these were the proper risk evaluation, limiting exposure and avoiding risks that are fraught with moral hazard, he said.
Buffett said: "All of our insurance operations have an intense focus on underwriting discipline. We do not equate 'winning' with market share. For those who do trouble awaits."
"Faraday provides us with access to the Lloyd's and London company markets and fully embraces this underwriting philosophy. The team has the ability, energy and expertise to profitably underwrite business. By sticking to these basic principles, I am confident of their success"
