The body needs some fat to fuel itself when there is not fresh glycogen available. Also, at starvation levels, such as with severe anorexics, the body starts to cannibalize itself, so as to keep fuel getting to the brain. So a minimum body weight is needed for the body to have healthy functioning of all organs.
Conversely, being overweight puts a strain on every system in the body, especially the heart, liver, kidneys, pancreas. That in turn causes problems such as diabetes and high blood pressure.
Doctors have studied the issue for many years, and arrived at the BMI as a guide. Before that, insurance actuaries actually tied height and weight together to see what was the best range for the mortality tables.
Thank your life insurance company for working to gte the best guideline possible.