Sun, oils or dirt
I don't have any problems with the leather wrapped wheels in my 3 other cars, which in theory should be more sensitive to oils, and my previous cars haven't had any sort of problems even remotely like this. Another thing that makes me doubt that it's hand oils is that I tend to drive holding the wheel at the 9-3 positions, however the damage is even around almost the entire wheel, which one could argue could result from the rotation during turns, but I would expect to see a wear gradient, where the 9-3 positions had more wear, and that's not the case.
The car is parked indoors most of the time, so I don't believe it's extended exposure to UV, unless the wheel is very sensitive to the sun, which would be very bad design by Honda's materials team.
What I find strange is that my friends wheel is doing the same thing and his car is also a MY2000 Insight. It does spend all day outside and shows the same level of wear as mine, which is inside a lot more and I also use a windshield sun screen when I park outside. The wheels in both have been doing this for at least the last 3 years, so it may be time related with some other factor contributing.
However if the later model year cars are not showing any wear, then I suspect Honda may have changed the composition of the plastic on the wheel.