Is it really a requirement of your insurance company? Or is it more a perceived liability issue? When I dive with a charter I always have to sign a waiver. Does that mean nothing? Even if you accept the fact that the dive charter has a requirement to ensure no one dives beyond their limit, it seems most reasonable experienced divers would consider a dive record a much better gauge of ability. It could also be argued in court that a diver who has completed OW, AOW and only 10 dives is not competent and therefore dive shops that rely upon AOW certification are not doing their due diligence.
I believe it is a perceived liability issue. As in, the shop perceives a significantly higher chance of being found at fault if I take someone on a 100' dive and they don't have an AOW card versus if they do.
As a "pro" who doesn't want to get sued and REALLY doesn't want to be found at fault for a diving accident, I do not want to put myself in the position of judging that a person is "capable" of doing a particular dive even though they haven't been certified for the type of diving in question. So, rather than evaluate their skills and experience, I can rely on their certification(s) and be afforded some protection in court on the basis that it wasn't ME that decided that are qualified to dive to 100'. It was PADI/SDI/SSI/XYZ that issued them a card saying they are certified as being trained and meeting that agency's standards for diving to 100'. What is the opinion and judgment of one peon divemaster compared to meeting all the standards and being certified by a large professional organization whose job is to train people to be able to do that dive?
For that matter, part of the process of becoming an instructor is learning how to evaluate students' skills. As someone who is not (yet) an instructor, who am I (or any DM) to evaluate someone and conclude that yes, they are capable of doing a particular dive? Does a DM have training in evaluating other divers' skills? And if I were an instructor (instead of a DM) leading a trip, well then, I might say "yes, I can evaluate you to determine if you are capable of doing a certain dive." But how is that evaluation really going to be different than, essentially, putting them through the relevant class?
It's like another poster said. It's all about CYA. And I'm not saying that with a negative connotation. I don't have a problem with any business owner doing the most that they can to protect themselves from being sued into bankruptcy. And I can certainly understand my shop saying "you are a DM. You are not trained to evaluate divers' skills. You will not lead someone on a dive unless they have a C card that says they are certified to do that dive."
I want to be safe and I also want to do everything I can to eliminate any reason someone might tell me I cannot do a dive. So, I have an Advanced card, and a Deep card, and a Wreck card, and a drysuit card, and a Solo card, and a Nitrox card. And a few more. They aren't that hard to get or that expensive. And I might have learned one or two things in the process of getting those cards. All worth it, to me, to be able to do the dives I want to do without being hassled (or flat-out denied).