anyone know if usps pays out on claims too?
Insurance is extra.
Delivery Confirmation is also extra unless you buy your postage online.
There's no guaranteed delivery time for Priority Mail. (It once was marketed as a 3-day product, but those days have long passed.)
As an owner of a The UPS Store, I detest USPS Flat Rate boxes. The best I can do is get a 4% discount, and free Delivery Confirmation, but I have to buy postage in advance (compared to UPS billing me after the fact.) If I charge enough to cover the cost of my employees processing the packages, plus the cost of running them over to the Post Office, I still have to listen to how I'm a price gouger because the average guy doesn't realize that money doesn't fall out of the sky to pay my bills. When I add on a mark-up of just half of what I get when I ship a UPS domestic package, I can count on some little old grandmother calling me a name she'd never say in front of her grandchildren.
If a UPS flat rate box isn't priced low enough to bring over business from USPS and FedEx, and only canibalizes the business from people already willing to pay full price, it's a waste of time. But if it's priced so low that UPS loses money on every package, it doesn't do any good, either. And even if I get the same percentage on the flat rate boxes as on the full rate shipping, that cuts into my revenue, too. X% of 50 is less than X% of 100, even if it increases the number of packages by a heafty 25%.
Now you want to talk about something crazy, instead of looking at USPS's heafily promoted Priority Flat Rate boxes, look at their Express Mail letters. I don't have to go much further than one zone out for a UPS NDA letter (weight limit 8oz) to be twice what an Express Mail envelope (no weight limit, as long as no tape is necessary to hold it closed) costs. Of course depending on the destination, the UPS deadline is anywhere from 3 to 6 hours later than Express Mail at the local Post Office. In the morning, people will walk out when I quote them an NDA price on a letter. (But they do love me at 3pm!)
But all in all, I don't think UPS should let USPS set the pace on prices. USPS is on the verge of imploding. They were denied an increase on First Class Mail rates, so they're going to have to raise their rates on their premium products. And let's face it: Even a "premium" USPS product is aimed at a lower target than the average UPS customer. I'd rather UPS worry about competing with FedEx than with USPS.