Forgive me if this is a dumb question, but can't they just act as their own insurance? Reimburse customers themselves? As I understand it, insurance costs more

Forgive me if this is a dumb question, but can't they just act as their own insurance? Reimburse customers themselves? As I understand it, insurance costs more than expected payouts (or the insurance company wouldn't make money), and is purchased only to amortize cost spikes too large to handle. So it doesn't make sense when the spikes are small (on the company's scale) and semi-regular. Maybe the actual expected loss from theft is too high?