The assertion that the float of insurance is a low-cost capital neglects the quantification of maintenance costs which can reach a significant ratio.
Consider that a combined ratio of 105% for an insurer already implies an implicit cost of 5% before any investment return.
This contingent liability is far from being perpetual without impeccable management and substantial liquidity reserves, which increases the risk ratio.
Events like the pandemic or natural disasters quickly turn this capital at charge into a liability, requiring prudent allocation and reducing margin of return.
Operating this float requires an active risk management to maintain a positive viability score, and not just simple exploitation to generate alpha.