Rob Neyer pens a superb column on why Ivan Rodriguez and Greg Maddux are still looking for jobs. He also includes this interesting tidbit:

It’s a risky bet, though. And more now than ever. Because — as Bill Madden reported in Sunday’s New York Daily News — insurance companies are significantly more conservative these days than they used to be, when insuring the contracts of baseball players. Before 2002, the sky was the limit and you could insure just about anything. That terrible Mo Vaughn contract? Insured, and so it wound up costing the Mets relatively little (which is something, by the way, that we almost always fail to consider when we’re talking about a team that’s wasted a great deal of money on a player who got hurt).
Anyway, no more. According to Madden, the insurers won’t cover any contract that runs more than three seasons, and even when they will insure a contract, it’s “only for injuries unrelated to any previous injuries.”

Here’s the Madden column. So the insurance companies have done something the owners were never able to do themselves; drive down the value of players contracts. The effect is two fold. If the owners can’t insure the contract, they will offer less money and/or a shorter time period, so they are not stuck with a long-term guarantee. If players are getting short term contracts, they become free agents more often, meaning that you have a high supply of free agents every year. High supply drives down prices. (Why sign I-Rod if Javy gives you a better deal?)
So it may not be smarter GM’s or owners or collusion that’s causing the soft free-agent market. It may just be that insurers are unwilling to take on the risk. Who would have thought it?