Legendary investor Warren Buffett’s portfolio won’t be scooping up shares of insurers that underwrite cyber insurance.  

At Berkshire Hathaway’s 2018 Annual Shareholders Meeting over the weekend, Buffett called cyber “unchartered territory” and said the fall-out and business risks from cyber-attacks are “going to get worse, not better.”

“There’s a very material risk which didn’t exist 10 or 15 years ago and will be much more intense as the years go along,” said Buffett.

Buffett was skeptical that any insurer can properly assess cyber risk and made clear that Berkshire Hathaway wasn’t going to be a pioneer in underwriting cyber risk.  “I think that anybody that tells you now they think they know in some actuarial way either what [the] general experience is like in the future, or what the worst case can be, is kidding themselves.”

Insurers have a “pretty good idea” on how to assess the probabilities of earthquakes in California and hurricanes in Florida, but not with cyber events.

Buffett also told his investors that he (and experts he’s spoken with) believe hackers are always ahead of defenders and that will continue to be the case, noting that software is written by humans who are not infallible and that code can always be exploited.

In his annual letter to shareholders, Buffett estimates that there is a 2% risk of a $400 billion “super-cat” global insurance disaster and that cyber risk is now part of that equation, joining hurricanes, wildfires and earthquakes.

According to Fitch Ratings and A.M. Best, insurers wrote $1.35 billion in direct written premium for 2016 – representing a 35% increase from the prior year.  The $1.35 billion figure is likely an understatement given the difficulties in segmenting cyber-related premium from other multi-line products.  Similar statistics for 2017 aren’t available.