Dying with Notoriety higher than 2 should mean no rebuys.

It doesn't look like it:



This was in 3302, so way before notoriety. Since the insurance is covered by Bank of Zaonce, I imagine they'd get flak too over covering notorious criminal rebuys. And they do answer to the law (at least Alliance), as was the case with the Kincaid scandal.
That looks like a whitewash to me, especially considering how many commanders slaughter entire settlements, steal everything that's not nailed down, destroy innocent ships, and even gank each other..
 
And all of this arguing still doesn't address the point that this is a game, the purpose of which is to have fun.
The moment you lose sight of that in pursuit of "w-w-w-w-w-w-well but realistically..." is the moment you're out of touch.
I've run into very serious immersionist simulationist developers before, opining with a completely straight face, that it ruined their immersions of the totally serous space station simulator that they were creating because the codebase they forked from allowed you to put the captain's hat on the executive officer's pet corgi.

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UNACCEPTABLE. UNREALISTIC. UNFATHOMABLE THAT SERIOUS FUTURE PEOPLE IN OUR SERIOUS SPACE FUTURE WOULD DO THIS. MUH IMMERSIONS.

Edit: come to think of it, that's probably my biggest immersion-breaker in odyssey settlements. Everything's too damn neat and clean. No unmade bunks, no pin-ups, no dumb whiteboard doodles, all the hardware is clean and neat and new and certainly hasn't been jerry-rigged with zip-ties to keep it working until the actual technician shows up to do a permanent fix. Where are all the homely, unprofessional touches? People are supposed to live in these places, damnit.
 
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Personally I have no idea why the Pilots Federation covers insurance of notorious criminals. It's the kind of thing that would very quickly get under scrutiny of the in-game superpowers/important figures.
All of the N superpowers and important organisations are absolutely fine with insurance being provided for criminal acts against N-1 of the superpowers and important organisations because they were generally the ones commissioning those acts in the first place, and realise that doesn't give them a lot of grounds for complaint that it's covered against the 1 they care about too.

The big ones get to give out more than they receive via plausibly deniable PF agents, the small ones aren't able to challenge the status quo on their own or even in combination.
 
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