GEICO will use AI to speed up auto claims

Berkshire Hathaway's big auto insurer is teaming up with a UK tech company to review repair estimates with the help of artificial intelligence.

In a news release this week, London-based Tractable said GEICO will be using its "proprietary computer vision technology, trained on millions of historical claims [to assess] vehicle damage like a human appraiser."

Instead of waiting for an adjuster to physically inspect the damage, the repair shop sends in photos along with an estimate.

The AI algorithms look to see if the damage and estimate are in line with lots of previous claims. If they are, the repair shop quickly gets a go ahead to proceed with the work.

If not, a human adjuster gets involved.

In the release, GEICO CEO Todd Combs, (who is also a Berkshire portfolio manager), said the new technology will get "our customers back on the road faster."

Tractable is already working in the U.S. with The Hartford's auto insurance business.

The Wall Street Journal quotes a spokesperson for GEICO rival State Farm as saying it uses some AI. "When a customer files a claim, machine learning predicts with a level of confidence if a vehicle is a total loss or repairable," although a human is still involved.

The Journal also notes Buffett "historically has been slower to embrace new technologies across his operating businesses and investment portfolio," pointing out that GEICO hasn't been as fast to adopt telematics as Progressive did.  (That involves collecting data about how a car is being driven directly from an electronic device in the vehicle, usually in exchange for a discount on premiums.)

When Buffett was asked during the 2012 annual meeting about Progressive's adoption of telematics, he said he did not "see that as being a major change," and didn't think anything "in this new experiment" threatened GEICO.

But as the 2021 annual meeting earlier this month, insurance chief Ajit Jain admitted that "GEICO had clearly missed the bus and were late in terms of appreciating the value of telematics," but "has woken up to the fact that telematics plays a big role in matching rate to risk."

He said GEICO has "a number of initiatives ... that'll allow them to catch up with their competitors, in terms of the issue of matching rate to risk."

See the full question and answer with Buffett and Jain about GEICO's efforts to catch up with Progressive in Highlights from the Archive below.

BUFFETT AROUND THE INTERNET

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HIGHLIGHTS FROM THE ARCHIVE

In this CNBC Warren Buffett Archive clip from the 2021 Berkshire Hathaway annual meeting, Warren Buffett and insurance chief Ajit Jain talk about the competition between GEICO, Berkshire's auto insurance company, and Progressive.

BERKSHIRE STOCK WATCH

BERKSHIRE'S TOP U.S. STOCK HOLDINGS - May 28, 2021

Berkshire's top holdings of disclosed publicly-traded U.S. stocks by market value, based on today's closing prices.

Holdings are as of March 31, 2021 as reported in Berkshire Hathaway’s 13F filing on May 17, 2021, except for Apple, Bank of America, and U.S. Bancorp, which also include shares held as of March 31, 2021 as disclosed in New England Asset Management’s 13F filing on May 17, 2021.

In addition to U.S. stocks, shares held as of December 31, 2020 of China's BYD, as listed in Buffett's 2020 letter to shareholders, are included. The price of those shares in U.S. trading is used to approximate the current market value of the position. The value of the stake as a percentage of the company's market value is fixed at what was listed as of December 31, 2020 in the letter.

The full list of holdings and current market values is available from CNBC.com's Berkshire Hathaway Portfolio Tracker.

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-- Alex Crippen, Editor, Warren Buffett Watch