I think that the term cookie jar insurance and the related concept is a way to help folks visualize the cost of loss and the related addition to the cost of selling.
Losses due to INRs, SNADs etc are just another cost of selling (part of cost of goods sold). I think in some cases sellers don't really understand all the portions of cost of goods sold.
Understanding the amount of loss per year or per # of sales or sales $ is important. Visualizing a few cents on each order is simply another way of saying the cost of "loss" is a few cents against a certain sized order.
In my case, and I happen to live in a much safer world, my "cookie jar" cost ends up being 9c on each $20 order.
BB's world is much less safe, so the "cookie jar" cost is going to be a lot higher than 9c on a $20 order.
I know mine by observation. If I were to start selling today, I would not know what my % loss would be, the closest I could get would be to observe what other folks selling my category(s) are experiencing if they are sharing it in places like this.
Because I have enough sales, I of course don't set aside $$$ to cover losses each year, I monitor the actual losses to make sure the loss percentage rate is acceptable. When it rises to a point where it is too high, I take steps to try to reduce the risk/cost of it.
It is very hard NOT to track an item worth $100 from a worries perspective, but given 99.5% or more of them arrive ok, it is much much more cost effective to bear the risk (in my world) and send untracked, assuming one sends enough shipments to spread the risk over enough items to make it economical.
If one is just starting out, a $100 loss early on can be somewhat $$$ traumatic so if one is just starting, it probably does make sense to have some $$$ set aside for possible claims. (In my early days on eBay I always kept enough in PAYPAL to cover the largest sale of the month incase it failed for any reason).
