To unlock INSANE difficulty you will need to complete all 8 intervals on a separate difficulty first. Once you have INSANE unlocked you must play through the entire game on INSANE difficulty. You must complete all intervals for this achievement to pop. You also must not replay, change difficulty, change characters or anything else between intervals. INSANE mode is also more manageable the higher level you are. Higher levels give you more health, more slow motion (possession) time and more grenade/ammunition. Even if you don't change anything sometimes this achievement will not pop. Start another game on INSANE and eventually you'll earn this achievement. There's no guaranteed method to earn this if it glitches, just keep playing.
There are a few difficult spots when playing on INSANE difficulty:
In the middle of the level you will be attacked by a Powered Armor, the easiest way to kill it is by stunning it with Shock Grenades. If you do not have any on you, check the wooden shed for 3 Shock Grenades. Once the Powered Armor is stunned, lay into it with your G3A3 or bombard it with frag grenades.
In the middle of the level you will be attacked by a Phase Caster and then immediately after a Powered Armor. The strategy in Interval 04 still applies, to your right (when entering the room) is a weapon crate with shock grenades. There is also a weapon crate on the left side of the room with the Arc Beam.
Near the end of the level you will press a button to open a bay door while Monostrosities warp in to kill you. Once you press the button to open the door, run back to the previous room and close the door. The Monstrosities won't be able to kill you and the door will still open. Every now and then a monstrosities body will phase through the wall, you can knife and kill them without risking yourself.
This strategy works if you brought the riot shield from the previous room (where you fought 2 Phase Commandos). Crouch, open the door and stand in the door way. The monstrosities won't be able to hurt you and you'll be able to kill them as they try to kill you. Once they're all dead you can reach the next area hassle free.