Fair point, but if the client does develop a preventable condition, it would be easy to show this is due to dereliction/negligence on the part of the physician, so the insurance would not pay out. If the client came down with a condition and the physician was not negligent, the condition would likely be non-preventable, wherein the refund clause wouldn't apply, anyway. Thus, regardless of outcome, insurance can never pay out, and the physician retains all the liability, i.e. no use for insurance.

How is it "easy" to show negligence?

Yeah that just passes the buck to someone else (the insurer), who is incentivized to investigate malfeasance.

Some insurance policies must not exist. Malpractice policies must not exist.

I am sure if I asked my mates they would all disagree with me on this. Bad luck for the patients.

Without malpractice insurance, would doctors be incentivized to not take on risky patients? Risky could be defined as litigious (I know this patient has sued another doctor before) or medically difficult to treat (this patient needs this surgery but they are at high risk of poor outcome due to their current state of health).

Having sued a doctor once, you might never be able to get medical treatment again.

Which would also disincentivize ridiculous lawsuits that you'd almost certainly lose.

It would also disincentivize legitimate lawsuits.