I second Kloudie on that as well. While its certainly a good idea, if they can force you to upgrade one system, they may think they have the authority to make you upgrade everything. I would challenge it, make him show you the statute/ruling etc..
Surveyors survey to the accepted ABYC safety standards regardless of when a boat was built. They "note" certain items they know can be dangerous and or insurance companies now require for insurance. Electrical, LPG and fuel systems are three of the big ticket safety items that are often "noted". You're unlikely to get flagged on a wire color code issue for example but are likely to get flagged for something like GFCI's, AC/DC safety ground tie, proper breakers etc.. Just because a boat was built in the 60's and 70's, and was insurable then, it does not mean it is or should be today. Insurance companies have the data that shows where and why they pay out and this has and is influencing what and how they are willing to underwrite.
I have a customer who ignored water intrusion into his decks, went through an insurance survey, and now can't get insurance until the boat is fixed, about 10k. He's lost an entire season of sailing because the underwriter refuses to issue the policy based on the vessels current condition.. Insurance companies are getting VERY strict and surveyors are not going to stick their neck on the line over fuel, LPG or electrical systems not meeting some sort of minimum safety standard without at least "noting" it in the survey. Not all "noted" items will be required to be fixed by the insurer but many electrical, fuel or LPG items will need to be addressed. We live in a litigious society and surveyors, like anyone else, cover their butts as do insurance companies in an attempt to minimize claims.
I get calls from customers all the time who's boats are now un-insurable until some noted items are addressed. Just installed two house bank fuses over this last week as well as a 12V propane shut off.. Even on our boat, which was in very good shape, I had about 15 items that had to be fixed before they would issue the policy.
The only "authority" here is the insurance company you need to underwrite your policy. Surveyors do get hauled into court if they let something slide that caused a loss and insurance companies have been known to go after surveyors for not noting potential safety issues. It's a real catch 22, but is today's reality. The changes in the last 12 months alone, in what insurance companies are demanding, is pretty crazy.