Note: if the claim is valid, then the risk was there the whole time and the guy who was buying 20% of the insurance was subsidizing everyone else. Also note, that you will eventually receive your payout as the long-run averages are all that matter.
Most of these things are just tweaks to the basic framework.
It's a mute point whether the guy with 20% of the insurance DAC shares was subsidizing everyone else because it's still an additional, and significant, risk that I as a potential customer would need to consider before buying a policy in this system.
With your model, the traditional insurance policy workflow is essentially reversed.
If I want prompt payment of my coverage once I file my claim, I would need to pay a much higher premium (buy more shares) all at once instead of buying them over time. This kind of defeats the whole purpose of insurance. When I'm insuring something I want my coverage to be paid out immediately if I file a valid claim. I don't want to be paid out slowly over time, I want to pay IN slowly over time. While I could eventually accumulate enough shares by buying them over time, theres a long initial period before I can accumulate a significant portion of shares.
Any good insurance company pays out claims immediately and has a good legal team that goes through subrogation to recover any funds that were claimed fraudulently. They also mitigate their own risk by buying reinsurance on the policies they write.
I don't know how your model will be able to compete with conventional insurance. Policy holders would, at the very least, need an additional outside policy to supplement their claim amount while it's slowly being paid out by the DAC.