The "draw by insufficient material" upon timeout rule actually comes from FIDE rules. According to wikipedia,
"... article 10 of the FIDE laws of chess states that when a player has less than two minutes left on their clock during a rapid play finish (the end of a game when all remaining moves must be completed within a limited amount of time), they may claim a draw if their opponent is not attempting to win the game by "normal means" or cannot win the game by "normal means". "Normal means" can be taken to mean the delivery of checkmate or the winning of material. In other words, a draw is claimable if the opponent is merely attempting to win on time, or cannot possibly win except on time. It is up to the arbiter to decide whether such a claim will be granted or not."
I have just been awarded a draw when my opponent ran out of time whilst I had only K and Bish. He had loads more "material" but no time. Sure, I could not win with just a K+B but I could win on time - and did. His flag fell. 1-0 in my opinion.
What is the point of a clock if you do not enforce a penalty if your opponent does not handle it adequately?
We might as well forget them. No clocks, no time.