The magic of float is a key profit driver in insurance models

In any insurance-based business model, including the Peace-of-Mind subscription model, there are two primary ways to make money: underwriting profit and "float." While underwriting profit is important, the real financial power often comes from the float.

1. Underwriting Profit: This is the most obvious source of profit. It is the difference between the total premiums collected from customers and the total claims paid out. If you collect more than you pay, you have an underwriting profit.

2. Float: This is the investment income earned on the premiums collected from customers before they need to be paid out as claims. Customers pay their premiums upfront, but claims are paid out later (if at all). This creates a large pool of capital—the float—that the company can invest for its own benefit.

Warren Buffett has famously used the float from Berkshire Hathaway's insurance operations as a massive, interest-free loan to fund other investments.

For a smaller business, the principle is the same, even if the scale is different. A roofer offering a repair subscription collects monthly fees. This cash can be used to invest back into the business (e.g., buy new equipment, fund marketing) long before it might be needed to cover a repair claim. This access to "free" capital is a significant and often overlooked benefit of the peace-of-mind model.