No, most insurance companies are perfectly legitimate. You are confusing 'legitimate' with 'morally sound'.
Which is not to say I agree that that would be an oxymoron. A 'morally sound free market' or 'morally sound unregulated capitalism': those are oxymorons, because there is no imperative that causes unbridled competition in free markets to lead to companies doing 'the right thing'. Which is why we need a government to regulate stuff. How much of a government is a different question: there's a difference between supporting libertarianism and supporting anarchism and not even the most staunch libertarian disagrees we need a government for some things.
My employer and I pay $7,500 a year for my health insurance. I developed a debilitating back condition which required over $150,000 in surgery and therapy. My cost? Less than $1,000.
A friend of the family was killed in a tragic accident. He left behind a wife with a long-term debilitating illness and 3 children. Several life insurance policies paid sufficient monies that they have the financial resources to live their lives.
I assume this reply was intended for my parent, because I was not arguing that companies were immoral.
I do argue that companies are essentially amoral: outside of governments, the only force working on them is the pressure to survive in the face of competition, using whatever means needed to achieve that goal. The only reason companies generally behave in morally acceptable ways is by government regulation. Without those, monopolies on drinking water, oil and other essentials would be acquired and enforced by companies with armies. But the net effect of the current state of affairs is that companies generally behave in morally acceptable ways.
Sounds like an oxymoron to me...