I wasn't thinking about outright rejecting any charge, but rather that you would price some charges more expensively than others. As a seller of insurance, you're going to price above your estimated percentage, to give you some profit and compensation for the risk, but if you price too high you have no revenue.
It also becomes a much more interesting market if there are multiple competing providers of insurance that bid against each other (just as ad networks work, for example).
As a buyer of insurance, I would always have the choice to not buy the contract and take on the risk myself.
If the market works (which is a big if), it should become an efficient transfer of risk to companies that are experts in evaluating it.
Very interested to hear more of your thoughts though, as you're obviously part of the target audience at your dayjob!