I guess the insurance companies want to make an accurate assessment of risk and some of these features make the car a more attractive proposition for thieves. Therefore, it's not just performance related modifications that they are interested in.
I think we are not being cynical enough
Insurance companies are only in the market for one thing - to make money (particularly for the shareholders). They are not in business because they feel like being kind and offering a public service.
The reason they ask the 'modification' question is because when the ordinary motorist who is trusting of many of the large organisations answers the question, they will answer in the reasonable way that everyone seems to agree with. i.e. if it left the factory that way, it is standard. You must realise that insurance companies have access to the same data as the dealer network in terms of VIN number checking for model-specific details, so shouldn't really need to ask this question.
SO, the reason they ask the question is because they know that most people will answer 'no' thinking that their standard car with optional CD upgrade from cassette is not 'modified' (we all know what a modified chav-mobile looks like, right?). Having answered 'no' previously, at the time of a claim an insurance company has the perfect excuse to exploit a loop-hole in the law not to pay out to the insured (i.e. YOU) because you have not been honest with you cars details.
This is all in the interests of making money, regardless of what is reasonable. Should the insurance company refuse to pay out, it is then up to you to take them to court - a joyful process I am sure.
One of the previous members comments are correct - if we find an insurance company that behaves in this morally unethical way, we should refuse to do business, and try to warn as many others as possible about the true service they are (not) providing.
Sorry if this is a bit of a rant.