Warren Buffett's Berkshire Hathaway has announced it is putting up for sale their Workers Comp specialty insurer, Applied Underwriters. The official story given is that Applied Underwriters competes with other Berkshire Hathaway insurers that sell Workers Compensation insurance.
Hmmm. Yeah. If you say so, Warren. But I have my doubts.
See, Applied Underwriters has sold a ton of policies to small business that could be viewed as less than understandable. Many of the businesses that purchased Applied Underwriters policies have felt that the premium charges sought by Applied were way, way higher than the salesmen had ever indicated they could be.
Our own analysis of some of these complicated policies has found that some of these policies were virtually incomprehensible in terms of explaining how premium charges would ultimately be computed. These policies have generated a number of law suits and some official disapproval from insurance regulators.
So maybe, just maybe, Berkshire Hathaway decided that it would be better if Applied Underwriters became someone else's headache. I could be wrong. But not entirely, I suspect.