There's also no way to 'appeal' the shrinkage they charge you for at the store on behalf of the thieves, so still seems better to me. In either case, you can shop elsewhere (or alternatively here, seek a different insurer) if you don't agree.

That is, the insurance is the appeal. It's allowing you to appeal that you're not a thief so you shouldn't pay full shrinkage premiums. And even if you think one insurer is wrong, you can go with another one, even while shopping at the same store -- providing you more appeal options than before when previously all you could do was just leave and go somewhere else if you disagreed.