Insurance externalizes internalities.
No, it doesn't.
In what way does it not? With insurance someone else is paying the bill even when you fuck up. You will feel some additional pain but most of it is offloaded.
There are ways to turn costs or sudden losses into externalities via publicly provided or covered insurance, but that's not an consequence of all insurance.
My remarks are limited to "most Insurance".
It's been no easier in the past to deal with sudden catastrophes than it is now.
I'm not so sure. In isolation this is an easy case to make...hey a tree fell on my house and now I can afford to fix it... there are also downsides and opportunity costs.
Hospital industry is a good example of what happens when you allow externalities to run rampant. Huge increases in overall share of GDP for little measurable improvement in outcomes. What is worse most of the expenditures go into dealing with the consequences of diseases which normally only occur when people fail to take proper care of themselves.
In any event disagreement is not grounds for -1 troll mod and +4 insightful is hardly deserved by those who veer off topic.