" fewer and fewer drivers to spread the risk over," 

If AVs are as good as we're told, the risk should decline with human drivers meaning an individual driver's chance of being in an accident (which is what determines rates) will stay the same, or even decline as distracted or drunk drivers are no longer inattentively piloting themselves around. 

Nobody's ever been able to explain to me how exactly improved road safety will INCREASE insurance. If anything, it should decrease it. 

Simillarly, the "incompatibility" argument falls apart on the fact that they will not ever operate on isolated allowances. There will always be the back street and urban thoroughfares with varying degrees of interaction with other obstacles, with kids, bikes, wildlife, construction crews etc. Human drivers are probably the least problematic aspect of that.