[gblargg]

Good point about risk versus pool size. An airline can "self"-insure if it's a common error, since there's no uncertainty as to whether it will happen in any given month. Insurance can't magically make it cost them less, and there's very little risk in covering the costs themselves. With a high-cost possibility that's rare, they can't tie up the huge sum of money for something that will probably never happen to themselves, so insurance is superior.