Is there any novel solutions that make a loan self executing via smart contracts or will we always have to have trust trust when it comes to these kind of transactions?
Hope I don't sound like a shill once again, but when talking about loans through cryptocurrencies I always suggest checking out the MakerDAO platform. They loan you through DAI stablecoins. But of course, like most loans, you need a collateral. For now, they only accept ETH collateral (BTC soon as they claim). Just do research on it.
Another reason people tend to open bank accounts rather than store money themselves is that they can get their money back in the event of being scammed
(a sense of security really). So is there any examples of companies providing insurance for people's bitcoin?
I think a lot of people just trust themselves to hold huge amounts of money at home, hence banks. Companies providing bitcoin insurance though, Coinbase. Though as far as I know, they wouldn't be able to cover 100% if ever 100% of their funds(including cold storage) gets stolen for instance. Their insurance only covers their hot wallets which is only 2% of their total holdings.