hi, each person can book their own travel insurance (if they want to) While travel agents will say you must have insurance, you actually don't need to have it - 1/2 the people cold have it and 1/2 not if you wanted (although of course it makes sense to have it)
if you had already paid for the holiday, and someone dropped out it wouldn't have any detriment to your holiday as such (presuming you would still go) they would just have to claim on their insurance for a refund of their portion. If you cancelled because they dropped out it would depend on your insurance policy whether your portion was covered (it probably wouldn't be)
If you hadn't already paid when the other people dropped out, you would lose your deposit, or if you still wanted to go the entire party would still (Probably) have to be paid for.