The view that the loss ratio fundamentally transforms a liability into an investment resource forgets the very essence of insurance.
First and foremost, the float is a promise of compensation, an obligation to policyholders, not a free investment fund.
Imagine a Quebec insurer facing a series of unforeseen natural disasters; premiums are no longer available capital but crucial reserves to honor these claims.
The ability to generate returns on this capital is secondary to risk management and maintaining trust, a nuance your approach does not fully capture.