I’m certainly not claiming the actual probability is 10^-40 , only using this as an example consistent with an upper limit, which probability would imply life has not arisen a second time in the observable universe. Actually this is way overkill — as you say, even if the probability is as high as 10^-25, life on Earth is still probably the only instance in observable universe. The point is that we have no idea what this all important parameter is.

Our upper limit is something like 10^-1. After all, there is life on earth! Our lower limit is 10^-25 or so.

Why pick the lower limit? Existence of life on earth is extremely powerful evidence.

Ah, but in my opinion we can't call 10^-25 a lower limit since, if life didn't occur in this collection of planets, we wouldn't be here asking the question in the first place!