sxz: Lawyer here.

Some Cross Lease instruments require that insurance be shared like OP suggests.  That said, many people ignore this and do their own insurance.  Not having joint insurance in that case means you are breaching the terms of the Lease, which if there are only two of you, and you both agree to it, there mightn't be much loss.  There can be risks with either approach however.  If you are joined to their property it may be in your best interest to know for a fact that they are insured.  You can only know this if you have a joint policy with them.

Consider this:  You insure your flat only.  You make full disclosure to your insurer of the circumstances.  You pay your premiums.  Your neighbour tells you their property is insured.  They fail to renew their insurance.  Their flat burns down, damaging yours, as they have a joined wall.  Your insurer might decide that they wont pay you out because your neighbour was not insured and it was a requirement of your lease to have joint insurance.

 Unlikely? probably.  Something to consider?  Yes.