BMI is used for lack of a better measuring tool. Since it's a general calculation a good doctor can see beyond the BMI figures. For instance, athletes who are very muscled will have higher BMIs.
BMIs also don't take into consideration people who are quite active vs. people who do nothing but sit most of the time.
For lack of a better tool insurance companies have to have some measurement to rely on so BMI is it. How else could it be done?
My OB-GYN laughs at the BMI. He calls it voodoo medicine. He told me to use www.weightzonefactor.com because is is very scientific, and he thnks that as I continue to lose weight post-surgery I should use a modern way.