On my new car the engine is only a tiny 1.0l, so I really don't see the point of adding the full 'proper' sports exhaust, but can someone recommend a chromed exhaust trim which looks the part ( but doesn't instantly rust).

The cars already getting the full dress up kit so I might as well add the finishing touches so to speak tbh.

Also is this something I'd have to mention as a 'modification' even though it's extremely minor to my insurers?

You might find this interesting:

http://www.fordownersclub.com/forums/tutorials/article/233-ford-fiesta-mk75-rear-diffuser-upgrade-st/

Depending on your insurer, you can declare it on a non-covered basis.

i.e. if you have an accident that involves that area it will just be put back to standard.

I think it is always worth mentioning modifications to insurers, particularly external, or you are giving them an opportunity to wriggle out of paying...