The idea that insurance float would be a simple “competitive advantage” neglects the strict regulatory compliance framework that fundamentally defines it as a liability.
The jurisdiction, for example via the PRA in the UK, imposes rigorous capitalization requirements under Solvency II to ensure solvency, making the use of these funds to generate significant alpha far from free capital.
These collected premiums are mandated to cover future claims, and any aggressive allocation attempt must comply with approval rules for active-passive matching.
Ignoring this would turn a necessary fund into a systemic risk, as illustrated by past underwriting shocks that required provisions well beyond expected returns.