They found a way to sidestep regulations in a non-traditional way, they're using AI for underwriting, but like I said, there's no actual evidence the underwriting is wrong.
Is a startup gets insurance for something they couldn't get insurance for elsewhere and then Corgi goes belly up, the startup is our their premiums but otherwise in the same place.
For all we know, there are multiple risk groups under the hood for different risk types/profiles to insulate mispricing of different policy types.
Honestly, I feel like startups don't buy insurance at all unless customers ask, there's just nothing meaningful there to insure. If you fuck up that badly you're probably just going to go out of business even if the insurance check comes through.
I agree that insurers definitely faces the urge to underprice risk because the shoe will drop later, but there's no actual evidence here that they're mispricing risk of that people buying it really think it's going to save them if they do something risky.