Why would an insurance company want to know the size of the car engine?

In a case of some vehicles the choice of engines can be anywhere from 4 cylinder engines to 8 cylinder engines. This can determine the value of the vehicle as well as the performance of that vehicle.

Higher valued cars will cost more to replace when a claim is made.

Higher performance cars are shown to be in more accidents.

Usually, those who choose to drive higher performance cars are riskier then those who choose to driver lower performance cars. This may not be true in your case, but overall.