Happiness (100% x losing $1000 + 1% x having a free necessary operation) > Happiness (1% x not being able to afford a necessary operation).
When you get a serious illness like cancer, the insurance company rescinds your policy and then you become uninsurable and die.
Insurance does cover the odd accident though, but they will fight tooth and nail over whether you need therapy to learn to walk again.
Happiness (100% x losing $1000 + 1% x having a free necessary operation) > Happiness (1% x not being able to afford a necessary operation).