There's 2 parts to this: the actual 'pay out claims' part which is the expense ratio, and then the part where the insurance company makes money off of the giant pile of cash they're holding before re-paying it to claims. I am not well-aware of ratio regulations (some amount per-state do exist) and generally their investments are quite conservative.

My source is having done investment in and diligence on a couple insurance companies (which I've since sold.)

You make a very good point, it had completely slipped past me that they can make investments with that big stack of cash they're collecting from customers.