That’s simply untrue, Cory.
I have a couple dozen Insteon switches, all controlled locally (by a non-Insteon controller from Universal Devices, which way predates the Insteon hub) and everything works exactly the same as it has for the last dozen years.
People who bought the Insteon hub and have no local control are a bit screwed, and if / when my interface module dies, I’ll be screwed too. But all my switches will still have local control.