It also makes it feel more serious, deterring insurance fraud. Since it has only upsides, no downsides, for the insurance company (except that they'll get bad ratings from customers which they clearly don't care about in this scenario, as most customers don't shop around for them), of course they demand it.

> Insurance companies don't make money by paying out claims, you know.

This is why if you want actual insurance (not "check the 'you must have insurance' box") you don't pick the cheapest company and check reviews, ignoring any reviews that don't mention a claim.