They could, but it wouldn't be instagrams problem then.
Continuously closing accounts, blocking content and reporting bullying isn't fixing anything. In some cases I get the feeling that it will make the problem worse.
We want to stop the bullying, not simply remove the evidence of it. Instagram can't prevent bullying, they can only hide parts of it.
But they can take steps to mitigate it on their platform. If you're doing your best and genuinely helping solve the problem on your platform, then you can say to kids, "hey - come hang out on this platform. It's a safer place. This is a place where you can socialize with less risk than other places."
That's good for the kids, and for the platform.
Arguing against is like saying, "My kid gets bullied, but why should I only solve the problem for him?"
That's not what it is like at all, though. I would say your approach is more similar to "my kid is being bullied at a local community pool, so instead of trying to address the bullying issue occurring to my kid directly, I will simply try to institute a bunch of rules to make that local pool a 'bully-free zone'".
That sounds like a great idea for a pool to implement, and I would feel better about taking my kid there vs. the local arcade that just shrugged their shoulders and said "what do you want, if they don't get bullied here, they'll get bullied elsewhere."
It's not "no risk", it's not a safe space, it's just safer than it could have been with no policing. And which other spaces is it safer than? School, the kids room, or 4Chan? Because I would argue that 4Chan is safer than Facebook or Instagram.
You need to address bullying on an individual level, because there's nothing you can do on a large scale that will eliminate all bullying.
Why is everyone treating this as the only acceptable condition?