Few years back I remember a little topical storms, Francs, I live right next to a marina, people were deliverately sinking thier boats to collect insurance fema monies. I stayed up all night fending off and retying lines to keep mine safe. I think fraud is one reason insurance companies are abandoning east Texas. I havde seen homes rebuilt that EVERYONE knew would be ruined in the next heavy rain! Crazy, unless it's done just for the insurance money. In a sane world State Farm would insure me, once every hundred years is not a bad bet.
New York used to have a serious problem with old buildings being burned to the ground by landlords who wanted to collect an insurance settlement. The insurance industry put an end to that by changing the way they paid their claims in all cases. Instead of paying cash for these claims, the insurance companies would work directly with contractors to rebuild the destroyed building. So instead of getting an $800,000 cash settlement, these arsonist landlords got new buildings.
On a very general note, the one basic weakness of almost any kind of insurance is that it introduces a "moral hazard" into people's lives -- in which they do things differently than they would otherwise do (take more risks, attempt fraud, etc.), simply because the insurance coverage is there. Imagine how much safer we'd be on the road if we all drove brand-new cars with NO insurance coverage!