If I recall, you sell trading cards and trading card accessories. Smaller items.
Assuming your lettermail cost to the USA is $3.19, the marginal cost to ship Chit Chats Express is going to be about $5.00.
If you are frustrated, the only solution is to go with tracking and find a way to structure the price to lower the sticker shock. I would consider baking the Canadian shipping cost into the BIN price of your items, and then charging USA buyers the difference for shipping. So instead of selling a $5 item for $5+$2 in Canada or $5+$8 to the USA, sell it for $7+$0 in Canada or $7+$6 to the USA.
Experiment with this for a month and see if your US orders remain steady enough, even with the raised overall price.
What I find with USA customers is that unless you sell something very niche that they cannot get somewhere else, price is not always the top concern. Usually it's placement that attracts them, as in your item is the first one they see. I say this because it is almost always cheaper for someone in the USA to buy domestically, not from Canada. If they are already paying more to buy from you, a few extra dollars for tracking might not dissuade them.
The number I would be interested in is not how many claims you get when comparing USA orders to Canadian orders, but how many USA claims you get per order to the USA. Are you getting 1 claim in every 10 orders, 20 orders, 30 orders? How much are you actually losing in terms of the cost of the product and the cost of shipping and supplies?
While I would never advocate for sending goods to the USA via lettermail, I also understand you're not asking people whether you should or shouldn't do that. You're unlikely to find a business model with tracking that can compete with those kind of savings - so your option would be to add tracking because making a bit less money overall is worth it to you in order to eliminate the hassle of dealing with INR cases, or to continue getting your current rate of INR cases.
I would at least experiment with different price points that allow you to include tracking and see how much it actually costs in terms of lowering your margin or lowering your volume of sales if you have to raise your price.
