Does this act as an insulator?
Luckily no. The opening point is earthed on the brass cb units. The dimpled button just sits in the register and stops metal-to-metal contact as TT said. (It can help reduce wobble on the pivot if there is modest wear.)
If the clip blade is sloppy, it will slide out of position and the button will eventually fall out.
The clip is held by a simple pin. If it's loose, a fractionally bigger one - or for belt and braces, tap the hole say 6BA and use a small screw to retain it. It won't interfere with the secondary earth brush if there's one fitted up the rear face.
A button can be made from anything really, I use a bit of 'klingerite' or similar, a gasket hole-punch of appropriate size and then a pointy punch to create the dimple.