Pace,
Often these insurance requirements are made up. I joined the committed of our club a few years ago. They used to have a 5 hour checkout for insurance purposes. Everyone genuinely believed that it was a requirement of the insurance.
My position involved renewing the insurance policy, and when I looked, low and behold....there was no such requirement. Our checkout was quickly changed to whatever was necessary.
I too suggest that you talk to someone higher up in the organisation to see if an exception can be made, or if it's there just to put off the newly qualified PPL and the instructor is trotting out the same line for everyone.
dp