The insulation is between the terrace chipboard floor and the wooden/steel beams under the terrace floor. Also these beams etc lie above the two bedrooms in the ceiling. Yes I don't like the central drain either. Weirdly the neighbour has the same design and seemingly no leaks. So it seems it comes down to choice of water proofing for the terrace. I can't tell what he has used as it's covered up with artificial grass on the terrace. I think I'll ask him also if they have had any issues.