After thinking about this some more, I am opposed to buying any cover at current prices.
The purpose of insurance is to socialize the consequences of a bad event across many optimally uncorrelated participants.
By supporting a diverse set of professional node operators, Lido already satisfies that today. If one validator gets slashed, the risk is socialized across thousands of stETH holders and/or LDO holders.
One could respond that the node operator set is still too small, and hence faults will be correlated enough to justify insurance. I think that’s a valid argument, but not convincing enough to give up 25%+ revenue. Especially if the cover is capped at 5% of total stake anyway.
Further, we should consider if insurance tips the scale for sufficiently many users to stake with Lido over other parties. In my opinion, there are enough other reasons to use stETH instead of an exchange token, since it can be used to generate addt. yield in Defi and soon be used as collateral in lending markets. Finally, the current set of node operators consists only of professional firms with a good track record. All in all, I don’t see the type of user who insists that there is even more insurance on top.