Surely all this demonstrates that, on balance, it is best not to engage in these type of insurance policies - since the other way to think about it is that the person charged £100 got a better deal.
Vets do it because they can and since there is no 'recommended price' for these type of services it is impossible to define what constitutes a 'rip-off'.
I don't possess an animal but I have declined to participate in the insurance scheme operated by my dentist (which provides a similar sort of cover) for over 20 years now. Have saved a packet over this time, compared to 20 years worth of premiums. One just has to be prepared for the odd large bill every now and again.