What drove the children to insanity?
It is most likely a combination of factors rather than any one aspect. The breakdown of civilization is one of the factors. The boys were used to the rigid structure expected of them, and to be left unsupervised, with no one enforcing expectations and demands, the young boys gradually allowed their baser instincts to prevail.
Mob mentality, or mass hysteria could be another factor. The old adage that "there is safety in numbers" could be a way the boys excused their savage acts. If they all participated, then it could not be wrong.
The psychological effects due to their isolation is another factor. The boys were used to being cared for, and the fear at the idea that they must be responsible for their own safety and rescue left some emotionally damaged. The emotional toll this takes might have led them to be ignorant as to the immorality of their behavior.
Of course, this is not true for all the boys, Piggy, Simon, and Ralph are able to see the savagery for what it is, but these factors also leave them unable to effectively deal with it, as well.
Who says they're insane? Don't they know what they're doing? They understand that Simon is murdered, they understand that Piggy is murdered, and they know that they are hunting Ralph when they are in the midst of it. They know he is not a pig. It is not insanity, but evil and cruelty that abounds on the island. They are giving in to mob hysteria and the "fun" of having no "civilized" boundaries. They eat when they are hungry and they do whatever they want when they want to do it.