Regulated and accountable is not enough. What's the point of taking a company to court if they are just going to declare bankruptcy? IMO, due to the nature of bitcoin, the insurance company must have other assets on the same order of magnitude as the coins they are holding that can be seized and liquidated in a worst case scenario.
part of being regulated and accountable is just as you said. having their own money set aside as backup, and not just using the premium fee's as the funds pot.
take exchanges, part of the licencing (becoming regulated) is to hand over a chunk of money to secure customers liabilities. thus by bing regulated you know there is a stash of THIER cash locked away in government control. to be used if the company runs off.
but i get the feeling that the OP doesnt want to be regulated, but wants to be more BS&T rather then elliptic vault. but thats besides the point.
if i had 1btc in MY wallet. and it was stolen. he needs to explain how id be insured firstly and how i can make a claim to get funds back or he can prove/disprove my funds were actually stolen, to ensure claims are done honorably.
for example. gox was not regulated. so how would OP's insurance protect me and reimburse me if i had gox funds going missing.. i know the answer, im just waiting for him to say it
I am not a big fan of government regulation in general. In a perfect world, companies and the market would self regulate. No intelligent consumer would buy bitcoin insurance from a vault that didn't have adequate reserves.
However, that might be idealistic. People are dumb, and bitcoin is not well understood yet. So perhaps in the short term some sensible regulation would be pragmatic.