The fact that there is no insurance isn't the buyer's problem so be prepared to lose your money OP.

According to Australian consumer law, it's supposed to be  the buyer's problem.

That won't change too much at the PayPal dispute level, but I'm quietly confident the ombudsman will take an interest in the case should the seller lose their funds.

Personally, as has been mentioned by other posters, I would have registered a parcel of that value regardless, and I would also voluntarily refund for an INR regardless, but it continues to baffle me as to why buyers are quite happy to shop via a means that carries unique, inherent risks that they're legally responsible for, yet so few think they should have any responsibility for minimising those risks and protecting their purchase. (And note that I made a distinction between purchase and money).