The answer to this question depends on the origin of the traveller, which is clear from the information already posted in this thread.
If someone is a citizen of the EU, UK or an EEA country and therefore has access to EHIC or GHIC then travel insurance to cover medical costs is not needed.
If someone needs to apply for a Schengen Visa, such as my friend from South Africa joining me in Reims in May, then part of the application process includes showing insurance is in place. The friend also has to provide evidence of a return travel ticket from her UK home and details of pre-booked accommodation.
What the French government wants to know is that if you need medical treatment then either your insurance or reciprocal arrangement with your home country will foot the bill.
Seems to cover it.
Status Quo for the moment at least - until we need a Schengen visa.