The current conditions may not have occurred for a long time but domestic water pipes freeze and burst in Texas on an annual basis and still they build houses without adequate insulation so I'm not optimistic about the "free market" reacting to events large or small.
Call me crazy, but I kind of feel like if you have no heat and the high is in the single digits (F), your pipes are going to burst regardless. Insulation only helps so much in that situation. I woke up last week to find water shooting out of my neighbor foundation due to a burst pipe and we never lost power or heat. Now, it did not surprise me that this happened to him, but that is another story.
On top of that, so called "adequate" insulation changes drastically depending on the type of building. You really need to adjust what type of insulation you use, if any, based on the construction process employed. For instance, my house is made with load bearing single wall masonry, meaning the interior wall and exterior wall are the same wall. In this situation you actually can not insulate the walls because doing so will, over the course of a few years to a decade, will compromise the wall to the point where it could collapse.
Building science is not as cut and dry as you imply it to be.