Dollars to donuts, the insurance companies were there first, demanding the state pass laws saying everyone must buy their products. That the government has, like a organized crime family, taken over the insurance industry, well...that's what happpes when you make a deal with the devil.
I don't have the history, but I don't have so much respect for insurance companies as to think it's likely. What seems more realistic to me is that the trial lawyers started making realistic actuarial estimation of a potential loss such a crapshoot that the insurance companies ended up running to the nanny state for protection.