USUALLY (but not always) insurance requirements (for anything) are based on hard statistics. Insurance companies don't want to insure excess risk (or unquantified risk) so they have standards.

But they also don't want to turn away business unnecessarily. They always try to obtain solid statistical data to base their decisions and rates on.

In the case of a movies star's lips or other unique insurance policies, they might not have enough empirical data to go on in which case they guess (and add a large margin for error).

But for most aviation insurance they have PLENTY of smoking-hole data points to analyze. If you are planning on doing something in aviation which is difficult or very expensive to insure, better think twice.

If you are doing something which is not insurable...then it is probably unreasonably hazardous.