That is a standard understandable response of any insurance company, states of emergency are invoked for many reasons, usually natural disasters, severe security situations and in all these cases the FCO in UK will advise against travelling to these places.If you ignore their advice the embassy can be reluctant or refuse to help as you have ignored their advice.
Google it it has been extended till 15th Jan, they have been extending it on a monthly basis partly because of Covid and people suspect themselves was a cover to deal with the democracy protesters using these powers.
To add to the confusion Thailand is under a state of emergency and this invalidates most normal insurance policies as it implies conditions are not normal for whatever reason for the government to invoke this power