Insured catastrophe losses in 2005 rose to a record $61.2 billion after Hurricanes Katrina and Rita devastated the U.S. Gulf Coast. And now companies like Harrah's (HET) are paying 50 percent more for property insurance because Warren Buffett's Berkshire Hathaway (BRKA) is one of its only options after last year's hurricanes. As the U.S. hurricane season begins, Berkshire is increasing its property and casualty sales just as rivals scale back. Buffett's prices are as much as 20 times higher than the rates prevalent a year ago. On some policies, premiums equal half of its maximum potential payout.
"We will do more than anybody else if the price is right,'' Buffett, Berkshire's 75-year-old billionaire chief executive officer, said. "We are certainly willing to lose $6 billion on a single event.'' Last year Buffet’s company lost $3.4 billion in hurricane claims. Berkshire is one of the few insurance companies that has the balance sheet to hold this type of risk. They smell blood in the water.