You used to be able to choose "insured" or "uninsured" swaps. They sent an announcement around a month or so ago increasing their take and saying that they will all be "insured" now. You are right, what exactly that means is perhaps unclear.
Unless the swaps would be "insured" by some 3rd party insurance company that has the ability to pay out an insurance contract in the event that the market were to crash/spike and they were unable to close out the margin positions in time (I would doubt they have this kind of insurance) then you would basically be betting that they have the financial ability to cover any trading losses in excess of 100% and without being able to audit their financial records, this (IMO) means very little. BFX takes 15% of swap interest that would otherwise be paid to lenders, to build an insurance fund. As far as I know, they have not made any obligation to pay beyond that fund. I assure you it does not amount to $32 million...
You are correct in that with current interest rates, there is no way that the 15% would be able to cover 100% losses from all margin trades, however would probably be enough to payout if losses were not too severe, that is assuming this is what those funds are being used for.