Your math assumes that instances of theft are evenly distributed across the price of the gear. I'd bet they're not. ie if you're going to commit felony theft

Your math assumes that instances of theft are evenly distributed across the price of the gear. I'd bet they're not. ie if you're going to commit felony theft (about $5k in most places), you may as well steal $50k. Thus my guess is it biases high. As for the company, my guess is they only have a profitable business if they don't actually fully insure and they dump a bunch of risk onto the people supplying the gear to rent. I doubt Adorama or BH are making so much money that there's a huge business opp if you actually pay for all the risk (as Adorama and BH do because they rent their own stock.)