To be fair this was a home inspector that was most likely looking at more than just electrical. His job is to point out things that may be a potential problem not so much his job to declare anything is a problem. His report can then be taken to the applicable professionals to investigate what should be done about those potential problems, some items may be dismissed as being normal/acceptable.
Someone should maybe inform him what limits he should put on such a situation before flagging it in the future. The insulation should be removed to a point past where contact is made in all cases or you can have bigger issues than if just a little too much was removed.