If I ship something, it is up to me to pay insurance if I wish to do so. Otherwise, I take my chances on something happening to the cargo or it getting completely lost.
Utterly true. However, your shipper is not trying to develop safer delivery trucks or airplanes so as to reduce the frequency of accidents. Those are other entities (GMC, Boeing, etc.). Your shipping may be trying to reduce driver/pilot negligence or otherwise abate other people's negligence, but those are strategies that are either well-known and probably already in use or under-development and of low marginal utility. Most importantly, what you're shipping 99 times out of 100 isn't valuable enough to justify a lawsuit.
These guys are building rockets. It is literally rocket science. While they obviously have incentives to avoid putting on impromptu fireworks shows, the government in this case is shipping items with limited immediate replacement capability (equipment, experiments, spacesuits) in addition to food, water, and the like. The government doesn't really care how much replacement would cost since it will pay for the risk one way or another -- the insurance simply becomes wrapped into the cost. It would really prefer that it not blow up. After all, ehen you have a large enough pile of cash, the smartest way to insure your risk is to self-insure.
By putting the risk of loss on the launch company, NASA would be giving them an extra incentive to become more reliable. The launch company can reduce their cost and increase profits (since they're usually bidding fixed cost to provide a package of launches, savings on insurance costs would go to the launch company). The reason for requiring insurance is that otherwise you either audit the hell out of the company, require a bond which ties up capital, or hope that they remain solvent after something goes *blam* without racking up an uncollectable debt. It'd be the Solyndra controversy in a somewhat different form.