I like the insurance concept. But insurance companies in real life price insurance to make a profit. I believe the cost of insurance is priced to spread the likelihood of a loss across the periods that the loss is likely to happen. In other words, if a team were to always buy insurance every year, they'd be losing money across all years combined by buying insurance compared to the amount of money recovered from insurance claim payouts.
So logically, nobody should buy such insurance therefore it shouldn't be implemented to the game.
I'm not saying it has to work that way in BB. But I think any insurance system in BB that was a guaranteed way to make money over the long term would be an odd 'insurance' concept.
Basically, you are asking for free money to the managers.