Regarding whether a UK person (or family) is willing to pay for ATOL, most probably don't know how much it is costing them unlike the insurance they pay on their car. But they know they can get a package Holiday where most if not everything is taken care of and they have confidence in the operator that they will get what they are expecting, and if anything goes wrong there will likely be an English speaking guide around to sort it out.
The alternative is to book flights, a hotel (or cruise), a hire car or day trips separately possibly having never been to the destination before and having to do much of that without knowing the local language andwith the risk that one or more of the companies involved may no longer exist when the time comes for the Holiday.
It's called "peace of mind" and has an intangible value.