I live in the UK and for as long as I can remember and probably considerably before that (and I'm not young) fuel has been self service.
I also have seen plenty of people smoking and using phones (surely the bigger danger is backfiring cars though). You know I cannot recall a single news story about a fuel station exploding due to this. I reckon that's the kind of story that makes it onto the news. Not to say it never happens, but with the amount of fuel pumped daily, I'd expect it to be a common event yet I cannot recall a single time I heard about it happening.
So, feels like insurance companies fear mongering stations into higher payments to me. Sure it's possible, but highly unlikely.