Your example is not a good one. Insurance companies have to pay out of their own pockets.
The difference here is, in the case of BG’s – it’s the developers’ money, not the banks. Which makes me feel there is some (corrupt) collusion going on between the two.
It’s supposed to be a ‘Guarantee’ – not “You can have your money back but you’ll have to fight for it in court, and maybe you’ll lose – Ha Ha”.