Wouldn't the insurance company say the same thing? Or rather they would say "we won't insure that thing". Which amounts to "You cannot build that thing if insurance is a requirement".
Who are those insurers beholden to, what are their incentives to represent the consumer in any way?
Some people would like to see more things like that.
Their incentives to represent the consumer are rooted in the fact that the consumer can switch to another insurance company. Which means that if one has overly strict requirements without charging correspondingly lower premiums, nobody will use them. Then you get the incentives you want: People prefer both lax requirements and low premiums and the insurance companies have the incentive to find a better balance than competing insurance companies.
Two follow ups:
1) Isn't this inefficient? E.g. insurance is most efficient the larger the pool is. Doesn't this system introduce inefficiencies (and therefore risk) into the market?
2) Do you feel like there are adequate tools to choose between different insurers today, and do you expect that everyone who owns or improves property should be reasonably expected to make an informed decision about which insurance company to go with? It's hard enough now to insure my car, let alone all the individual decisions that go into building a house. (From materials to design decisions to occupancy rates to the health of the occupants, etc.)
No amount of compensation can bring someone back if they've been lost to a fire, a deck collapse, a sinkhole, an electrical issue, etc.
The use of lead paint causes irreversible damage to nervous tissue, and lead contamination can lie undetected in soils for years after a property removes all the lead from the buildings.
Why would we want to invest a massive amount of effort into figuring out, e.g., the actual insurance risk of poorly built structures rather than saying, "No, you cannot use highly flammable plastic cladding on your highrise."
Especially if insurance companies can go bankrupt or refuse to pay out. How do victims get made well if the insurance company refuses to pay on some technicality? The last thing I want to deal with is more insurance companies.