Credit card companies are Account Receivables factoring companies. Let me explain.
They let consumers borrow money ( and make money off interest from those who use it as a revolving facility ), in return, merchants get the "business" that otherwise consumers cannot afford. The merchants basically sell their account receivables to get cash right the way, that 2 to 3% "commission" is the factoring discount.
When the account receivables the credit card companies "bought" turn out to be "bad" ( due to fraud, bad product), they want their money back.
So they are "customers" of the AR of the merchants, therefore they don't provide insurance. It is like you don't provide insurance to the gun shop in case the gun you buy from them is bad - doesn't make sense that way.
hence the merchants may need to buy insurance to insure themselves or self insure of bad AR they may factor to the credit card companies. The complicated part is that credit card companies and merchant account providers control the "mechanical part" of fraud control. yes, they are the customers so they are trying to protect themselves as best as they could, but ultimately it is the seller of the account receivable who ( ie the merchant ) is responsible! After all, they depend on the merchants too