Fairly-priced insurance for this sort of thing is available for much closer to its actuarial value—that is to say, much cheaper than at the rental car counter. So cheap, in fact, that in the US, surprisingly many consumer credit cards toss in some sort of rental car insurance at no charge—good wherever, whenever, and however often (within reason). Without even so much as a driving history check.

For that matter, the car rental firms routinely bundle damage waivers/insurance products into their volume/corporate contracts and still arrive at prices below the retail base rates.

I don't think it's the insurance itself that's being sold here at all. It's more more predatory than that: it's the kind of price discrimination that squeezes a premium for "peace of mind" from the segment of their retail trade who are nervous, inexperienced, risk-averse, or financially unable to accept the small risk of an expensive event. Like a payday loan—it's spectacularly expensive to be poor.