Why? They insure one specific thing: a contract between two individuals that they trust. The only way they lose out is if they don't actually have any realistic way to enforce the contract on the renter— which would surely be a way bigger problem for their business than having to pay out some fraudulent damages?
"Some" fraudulent damages? If people figure out a reliable means to defraud you, they will do it until you fix the problem. And, congratulations, now your primary focus is fraud detection. You're now an insurance company.
There's also the fact that insurance companies are subject to many laws and regulations that other businesses are not.
Are they going to require faxing in photocopies of ID? Run credit checks? All this would do is to verify that a person with this information exists. This wouldn't stop a bad guy from using someone else's identification to register, and none of this addresses whether the renter has the legal right to rent the property.
And, once they are that deep in the process, if Airbnb is making any representations to their customers about this kind of vetting, then they are exposing themselves to liability if something goes wrong.
Right now, they are content to verify that the customer and landlord have valid credit cards / bank accounts, and that's that.
All I'm saying is that the due diligence to prevent fraud is the same as the due diligence to ensure somebody won't burn down my house for fun. Whether or not they can meet the standard, that's what they should be doing.
