I went to Nepal two years ago. The standard insurance of my Mastercard Gold specifically excluded medical assistance/transportation for acute altitude sickness from the coverage (and rescue operators are reluctant to intervene without proof of proper insurance coverage).

As a precaution (having read about it on forums) I had taken an additional insurance from a French shop specialized in hiking and mountaineering (le Vieux Campeur) to cover more events.

Good thing I did because I ended up having to be evacuated for something that was initially considered as acute altitude sickness and turned out to be a lot more life threatening once in the hospital.

The obvious counter move is just to charge higher premiums. It works whether the crises are real or fabricated. The real losers are not the insurance companies, but other tourists overpaying on their premiums.

Priced into the premium. It's not your run of the mill health insurance.

Extreme activities are excluded from standard travel insurance packages. This is happening with insurance specifically for these activities.

In my experience, it's only the cheap insurance policies bundled with credit cards and various memberships that consider high-altitude hiking a high-risk activity. Any travel insurance you buy as individual should cover it. If there is an altitude limit, it's usually 6000 m, so Everest Base Camp and Kilimanjaro would be covered but Aconcagua wouldn't. And any actual mountaineering would also be high-risk, regardless of altitude.

Normal travel insurance doesn't cover high-risk activities like mountaineering. You have to buy a specialist policy.