In fact, insurance is a massive benefit for everyone but the biggest retailers - there's few who would shop at smaller retailers after the first couple of times

In fact, insurance is a massive benefit for everyone but the biggest retailers - there's few who would shop at smaller retailers after the first couple of times they've been scammed, they'd prefer to stick to the Amazons and the Wal-marts, so the insurance is a necessity. However... bitcoin does allow new insurance providers to pop up - the insurance provider no longer has to be the same entity that holds your cash (your bank) or provides payment processing services. They could experiment with new models - multi-key escrow until service delivered, an "approved store" model where they'll provide insurance on purchases from stores that they've checked out without ever having to touch the money themselves, or more. This could all be cheaper than what your processor + bank combination costs, potentially. The thing is... that's not really good enough for customers. Nobody thinks enough about a few pennies per purchase to pick up a whole new currency.