A huge issue here is risk is not uniform, nor is it fungible. The particularly broken forms of insurance are also the most fraudulent - the ones where risks are uniform across the risk pool like guaranteed insurance.

Real insurance for risk requires underwriting like a loan and a rating scheme. If anything this would be a protocol or company built on Bitcoin (layer 3).

The insurance markets (ex health insurance) work quite well, especially in a mutual scheme where profits are returned to policy holders.

In my opinion an ideal solution would be similar to a product offered by a mutual carrier minus the doxxing of info. Perhaps this could be done by creating a firewall between underwriter and carrier where the underwriter knows the info, attests to it, the carrier takes the risk without knowing all the details. Such a system would provide a significant privacy improvement.