If he did not have insurance, then here is what I would suggest that you do, if you are sure you shipped it in working condition.
Tell the buyer that since he did not get insurance, you are not forced to give him a refund, but in the interest of good business practices, you would be willing to refund his money under the following conditions:
1) he pays to ship to you.
2) he does not get refunded any shipping and handling fees... fees including ebay listing fees, final value fees and PayPal fees will be deducted from his refund.
3) once he ships the item back to you.. at his expense... upon reciept of said item, you will refund the balance of his money with the deductions stated in 1 & 2.