What's the fair thing to do?

I would say, if the insurance works out, pay him for the repair; if not, it is on him to fix the camera. You did not stipulate a warentee, and you shipped the item to the best of your ability. There was no dishonesty in your sale, you did nothing wrong. If there was a problem with the camera, he should have contacted you sooner so that the insurance could have covered it. It is his fault for not contacting you sooner.
 
Good news - the buyer decided it wasn't worth the trouble to ship the camera back and has decided to have the MP finder installed, which was his main concern in the first place.
 
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