I look this up because it was something I have never seen. According to Wikipedia, it was a thing and a total scam. "Lyle is rumored to be involved with Crazy Redd in a large-scale scam, tricking players into buying things at ludicrous prices." Here are the claims.
God, the lore to this series is amazing.
Lyle did sell insurance in Wild World.
I bought it just to stop him hassling me.
I forgot to add he also gave you 100 bells for a forged painting.