If I recall correctly, the recall instructions do not say anything about some system failing because of the wiring. I suggest that you ask to see the recall itself and read for yourself what is supposed to be done. Then you will be in a better position to discuss it with them. I think that if the wires are loosing their insulation and you are still within the time and milage constraints, they should replace the looms. They should know this, but since they don't, you may need to do a little more homework.
