Insurance Float

Topic

Insurance float refers to the temporary pool of money collected by insurance companies as premiums that has not yet been paid out in claims. Because insurers collect premiums upfront and pay claims later, they are able to invest this float for their own benefit, generating investment income. This mechanism serves as a highly valuable source of low-cost capital, famously leveraged by conglomerates like Berkshire Hathaway to fund major acquisitions and investments.