Geico's Wait and See AI Strategy Revealed at Berkshire Meeting Puts Lemonade Ahead

Alarm bells started ringing in my head as I listened to Ajit Jain, Chairman of Insurance Operations for Berkshire Hathaway, tell investors about his stance on AI in the insurance industry this weekend.

For the unfamiliar, Berkshire Hathaway owns Geico outright, which is the second largest property casualty insurer in the US by premiums after State Farm.

Founded in 1936, and first invested in by Warren Buffett in 1951, Geico has been an innovator in insurance. They made their claim to fame primarily through low-cost efficiency via direct sales of insurance, rather than using costly agents that rack up commissions.

Now, 89 years after founding, and 74 years after Buffett’s investment, Geico’s current stance on AI innovation risks its decline into irrelevance.

At Berkshire Hathaway’s 2025 Annual Shareholder Meeting this weekend, Ajit Jain gave investors a shocking statement of how Berkshire’s insurance business is navigating AI. Read it below:

I couldn’t believe what I just heard when Ajit said this. It is almost unfathomable, and yet something that has happened to legacy businesses time and time again. To me, this statement is a signal that Geico’s time is coming to an end.

Let’s unpack what Ajit said:

• Implied AI is a “fashionable thing”

• Claimed they are “not very good at being the fastest or the first mover”

• Said their approach is to “wait and see until the opportunity crystallizes”

• Right now they “dabble in AI”

• They “have not yet made a conscious big-time effort” to pursue AI

• “Should that opportunity pop up, we’ll jump in promptly”

Unbelievable! Imagine if Amazon, Google, Apple, Meta, or any other big data-based company made this statement! There would be an uproar!

Businesses, especially in data and tech, are pursuing AI like their survival depends on it. Because it does! AI and automation are disrupting a multitude of jobs. Most big tech businesses already have 30-50% of their code being written by AI.

Insurance is an industry ruled by data. It’s all about pricing risk to rate and the efficiency of its operations. AI and automation have an enormous impact on data-based companies because they can find patterns in complex data sets that people never could. It can also replace jobs that can be serviced by AI, rather than people.

An example outside the insurance business where AI is already disrupting is lending. Upstart, an AI financial services company, uses thousands of data points to figure out the credit risk of borrowers. Their platform provides 5x more risk separation than FICO. There are numerous other instances where AI is proving leaps more effective than traditional non-AI methods of slicing data.

In the investing world, Berkshire Hathaway's, with nearly $90 billion in annual premiums, approach to AI contrasts sharply with the scrappy insurance startup Lemonade, with $1 billion in premiums.

Lemonade has been using an “all-in” approach to AI, not just recently, but as part of the company's DNA since its founding in 2015. Lemonade has achieved a handful of notable accomplishments already through implementation of AI and automation. Notably, they fully automate 55% of its claims.

AI also propelled Lemonade to beating the world record for speed in processing claims. They pay claims in as little as 2 seconds. How do they do this?

Let’s look at pet insurance claims. Here, Lemonade uses AI-powered medical records review to understand a pet's medical history. This allows them to analyze and validate pet medical records with unmatched velocity and precision.

While Geico appears to be manually reviewing dozens or hundreds of pages of medical history to understand a claim, Lemonade is doing it for less than pennies on the dollar with AI-compute.

It’s no surprise that Geico can’t compete with Lemonade on high-claim frequency products like pet insurance. Just compare their search interest in Google and you’ll see who is winning market share in this product.

Though pet insurance isn’t a massive industry like car insurance, it is an industry that requires extreme efficiency. Because claims are frequent and margins are low, only highly efficient insurers can effectively compete. No wonder Geico isn’t advertising to compete on products like pet if they aren’t going “all in” on AI to drive efficiencies.

As Geico is waiting until the “opportunity crystallizes”, startups like Lemonade are already taking advantage of the opportunity that exists today.

This is just another example of a legacy business waiting until it’s too late to adopt the next big s-curve in innovation. We are witnessing a changing of the guard moment. Just as Sears and Blockbuster fell behind in online distribution during the digital revolution, legacy insurance businesses like Geico are at the verge of falling behind to cloud-based AI startups that are compounding efficiencies at an incredible rate while legacy players “dabble”.

ALSO READ: The Truth About Lemonade's Finances & Cash Position

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