Tezos Bakers (validators) must put up a bond which is subject to slashing, but delegators are not subject to slashing. This proposal seems to be to be a very complicated way of pushing towards that model for Cosmos validators.
It is also worth mentioning that every jurisdiction in the world heavily regulates insurance.
From the Ontario Insurance Act, R.S.O. 1990, c. I.8
Necessity for licence
40 (1) Every insurer undertaking insurance in Ontario or carrying on business in Ontario shall obtain from the Superintendent and hold a licence under this Act. R.S.O. 1990, c. I.8, s. 40 (1); 1997, c. 28, s. 88.
Prohibition re: licence
(2) No person shall carry on business as an insurer or engage in an act constituting the business of insurance in Ontario without a licence under this Act. R.S.O. 1990, c. I.8, s. 40 (2).
(3) No insurer shall carry on business in Ontario as an insurer of a class of insurance that is not authorized by its licence under this Act. R.S.O. 1990, c. I.8, s. 40 (3).
Prohibition against acting on behalf of unlicensed insurer
(4) No person in Ontario shall do or cause to be done any act or thing mentioned in subsection 39 (3) on behalf of or as agent of an insurer that is not licensed under this Act. R.S.O. 1990, c. I.8, s. 40 (4).