Well as you mentioned, the ceramic insert is there for insulation and offers excellent heat protection. This helps keeps heat from transfering to the piston which in turn transfers to the brake fluid. It is also cost effective.
Brembo uses titanium inserts for their top level racing caliper. Other than that, stainless steel inserts are used in other race calipers like the 6 piston aftermarket BBK's that we have on our car.
OEM manufacturers get a choice of all three. Obviously, OEM tends to go the cheapest route if they think they can get away with, which is probably the case here. Sucks that BMW is willing to throw in such nice calipers from Brembo and then skimp on a part that probably cost $20.
Originally Posted by atr_hugo
Fred, any idea of why they'd use ceramic in that application (other than as an insulator)?