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I can't believe they aren't using multi-signature internally. This is crazy.

Can they demonstrate the procedure works well enough that an insurance company would underwrite them for the full value of the cold wallet?

What happens after an accident when they come up one secret short? The 98% are apparently not insured.

Shamir's Secret Sharing and multisig Bitcoin transactions support arbitrary n-of-m pieces/keys, e.x. a 3-of-6 scheme would require 3 of the 6 pieces to reconstitute the key/sign a transaction, so any 3 pieces could be lost.

2-of-3 is common for end-user multisig. Generally you'd have 1 key physically backed up on paper in a secure place, 1 key on one of your devices (phone or computer), and 1 key either on another device (hardware wallet or phone) or controlled by a 3rd party that does risk analysis/fraud detection on your transactions.