The cruise line can establish a refund and deposit policy which allows for CFAR, for example. As the cruise line is not a licensed insurance company, it cannot describe that refund/deposit policy as insurance. Many cruise lines today have adopted very generous cancellations policies to encourage bookings.It was the cruise line that offered CFAR, not the insurance company?
Why don't you post your policy for us to read, removing any personal information like your full name and address. None of this is making any sense regarding the insurance. As SoCal stated, if you had a legit policy in place and the cruise line cancels the policy without your approval then contact the state commissioner.
@Neil Maley when you and your wife book cruises for clients and they opt to buy a policy directly from the cruise line, who controls the policy? The passenger or the cruise line? Do cruise lines offer CFAR?
An insurer can re-insure the risk of excessive claims with one of the re-insurers in that business. That contract might even specify that re-insurance kicks in when losses exceed a benchmark, without regard to the cause of the losses.