Insurance provides recourse that covers both intentional and unintentional damages. Properly implemented insurance systems offer a strict superset of the functionality provided by reputation systems and also don't require privacy compromises.
Suppose I want to go to a restaurant. I look at the reviews on Yelp and I want to attend only to the reviewers who are deemed trustworthy by my web of trust. A reputation system can help me with that. I fail to see how an insurance system, no matter the implementation, can realistically provide a superset of this functionality.