I participated in this activity in that I created software systems to enable the creation, valuation, analysis and management of the securities. As such, I'm sure I'm biased, but perhaps I also have some additional information and perspective.

At the points in time when the securities were being sold, they were not known-bad. It's possible a few were sold afterwards, but they stopped being created pretty much the moment it was realized that they weren't going to perform. After all, the profit on them came primarily from holding a piece of the equity tranche (rather than from the sale itself), and the value of that tranche plummeted to zero and those bits were renamed 'toxic assets' in the press.

As this new information came to light, two activities occurred. One was the wind-down of a lot of the structured products. Another was that traders looked for ways to use the information for a profit, such as buying swaps to profit from it.

While I support 'what did they know, and when did they know it' style research to find bad actors (of which I'm sure there are some), it's my sincere belief that the vast majority of the deals were made in good faith.

I don't think the insurance/fraud analogies are accurate, nor particularly useful in garnering lessons learned.