Not for the majority of people. I've even heard it's becoming a common practice for HOA's to require homeowners insurance so even if you are cash buyer you could still be forced to buy insurance.
Near LA I imagine the land itself is valuable enough to get a loan on and still valuable if it burns.
But is it actually that valuable if no potential buyer could insure a house on it? This is the gist of the article.
It just means the value of the house without the land has to be captured in the down payment so the bank can't take a loss on it.