What requirment to have insurance is the problem?
I'm pretty sure the CAA have no minimum insurance requirement for FTOs - there may be on for G-reg aircraft but no for FTOs.
Therefore they're not in violation of anything legal - I assume they meet the minimum standards now (although previous threads and newspaper stories suggest otherwise) but these really don't provide you as an individual with any kind of protection for your health bills etc - so that's why beware if a school says they have the "required insurance"