Medibank's risky investment portfolio

Warren Buffett has said “What counts in insurance is the amount of float and its cost over time.” But what does Buffett mean when he says ‘float’ and why is it so important to Medibank, Australia’s largest private health insurer? When you take out an insurance policy, you pay your premium up front but, unless you’re unlucky, generally won’t make a claim until sometime down the track. Medibank receives cash from you today but it may be years before it has to pay for any of your healthcare expenses, such as a hospital visit. In the meantime, Medibank gets to...

Warren Buffett has said “What counts in insurance is the amount of float and its cost over time.”

But what does Buffett mean when he says ‘float’ and why is it so important to Medibank, Australia’s largest private health insurer?

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