Clearly you are not an attorney. Fraud is difficult to prove because there has to be "intent". Unless there are e-mails, videos, correspondence, etc. showing that LL instructed its suppliers to violate the laws, it's going to be difficult for the insurers to walk away from their responsibility. Imagine, with all of the technology available today, if there are NO tangible evidence, then maybe LL is, as they've said all along, innocent of the charges levelled.
It is VERY common for insurance companies to initially "deny" coverage until they have investigated the matter. In this case, the carriers want to see if there is any "fraud" or "misrepresentation" on the part of LL that would void their responsibility. If no fraud and/or misrepresentation is found, then the carriers will be forced to indemnify the company as that is what they have been paid premiums to do! The carriers can't simply agree to accept premiums and then, when a claim comes in, simply refuse to indemnify them. There isn't a court of competent jurisdiction that will allow such a one-sided interpretation of their contractual responsibilities.
How is it that every analyst has been able to test LL's product and the government's test results haven't been revealed? Clearly, there would be stock movement, either up or down, on the findings. It's time for the government to be transparent and release its findings!