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I think this is an improvement, but not sure it solves the problem. The question first becomes the limit of insurance rather than size of the investment (purchased by the investor or the firm?). If you want to make the insurance statutorily unlimited, it shifts the question to the capital of the insurance company (and now insurers will be more similar to equity investors). In both of these, we're moving in the right direction, but these limits can become relevant for the types of liability events that are existential issues for large publicly traded companies (e.g., mortgage lender / financial institution liability for the financial crisis, nuclear cleanup).
Nevertheless, insurance would be an improvement since the liability still exists whether it's the investor, firm, or society taking the risk.
I agree there is still the matter of the maximum liability amount that insurance must cover.
Presidential candidate Andrew Yang proposed putting the largest shareholder(s) in jail if the company breaks the law, if I understood his proposal correctly. This makes as much sense as jailing voters for Nixon's crimes during Watergate. The shareholders are passive investors and have no larger role in management's decisions to commit crimes than voters had in Watergate.
One advantage of this system is that insurance becomes a big, obvious target for our education systems. If everyone has to have it for everything, then it is sufficiently common that it would make sense to teach directly, and to anchor things like math and finance instruction.