Two questions. First, insurance underwriters sell surety bonds, so what makes them a "horrible" way to handle insurance? If the states mandated actual insurance, you'd be held hostage to the arbitrary requirements of insurance companies; the bond requirement allows you to substitute your own capital for the judgement of insurance underwriters if that's what you want to do, but also allows you to avail yourself of the insurance industry.

Second, even though separate bonds are required by each state, what prevents insurance companies from simply selling you a surety bond product that meets the requirements of multiple states simultaneously?