The assertion that insurance float allows for organic growth without dilution overlooks the crucial point of ownership and governance of these funds.
These premiums represent contingent liabilities that require a clear approval process for their use, not free capital for expansion.
Traceability and documentation of investment decisions are imperative, as the FCA requires insurers to maintain adequate reserves to cover claims.
Neglecting this risk management can lead to regulatory sanctions, as demonstrated by Solvency II capital requirements for insurers in case of underestimating liabilities.