I agree. The institutional approach can help suggesting alternative solutions to such a predicament. I just want to add a theoretical part to that:
We've already had models that deal with long-term effects of different shocks [core argument in the first part of the article], be it consumption, or any other macro-level variables. There has also been a parallel debate concerning the "heterogeneous" nature of such factors: for example, the increase to 3.7% in savings may well over-or under-represent the true increase in savings. Same for consumption. A successful link to the monetary policies, I guess, may yield better results- with more mature policy implications.
Although an "individual" can diversify away certain types of risk, risk still exists in the aggregate level and systematically, cannot be diversified.
Application to this article: a home-owner can buy put options on the value of his property (or any other type of insurance) but as the economy is hit, there is no guarantee that the financial insurance is actually going to "pay": like what is happening to the CDS market on Greek bonds.
In other words, it is still very likely that an individual pays the premiums but would not be compensated, at the end of the day.
(One certain note to help understand why, is that large economic shocks most often affect the whole economy, therefore both individuals having bought or issued the "insurance" or the insurance firms go down together (AIG for example) )