An insurer needs to provide a courtesy vehicle for up to 60 days sometimes, even longer. An accident management company (i.e. a legal firm) makes their money from that car rental that usually provides "like for like" but prestige vehicle, for example an Audi A1 instead of your damaged Fiat 500. Same size of car but commands a rental premium of £100 per day.
Now, if you have to have that Fiat with the scratched bumper waiting A MONTH to enter a bodyshop that's £3K already spent before the respray even started! It's easier, quicker and more viable to write it off and either send it to scrap auction or let the owner keep it for a fraction of the price.
There is money in that market but it's not for everyone, the customers that can benefit HUGELY from a Cat N car are the ones that buy newer very low mileage cars, still in warranty which most manufacturers (not all) will still honour and then do a lot of miles in the space of a few years which devalues the vehicle massively anyway (write off or not). No finance on write off cars so makes selling slightly harder.