If the insulation is being damaged, then either something is hitting them or they are being twisted or moved around. The latter usually causes cracking that doesnt' look like your picture. That pic looks like impact damage--the only way to prevent that is to prevent hte impacts.
So...if the problem is impacts from laying down the bike accidentally or on purpose, you could take a BMX footpeg and cut a slot in it for the wires, and widen it's axle hole to fit yours, and fit it over the axle *outside* of the main axle nut, with a secondary nut to hold the footpeg on. (this is necessary so you don' thave to tighten the main nut *inside* the footpeg, which isn't an easy proposition due to the axle wires themselves...which will make it interesting to tighten even the secondary nut).
Or if it never gets laid down but has stuff that hits the axle now and then as you ride (brush, etc) you could make a plate that bolts to whatever fender mount points you have on the dropouts, or the axle, or wherever, that then sticks out past the wiring on the axle, as a "brushguard" to keep stuff from scrubbing on the wiring as you ride thru it.
A simple rubber cap over the end that copmletely covers that end of hte axle will also help--Fusin includes something like that for their "1000w" geared motor kit, if you read my review thread for it there are some pics of the caps--but on theirs the wireing end cap still has a hole for wires toc ome thru, and stuff can still hit it over that. So they use a spring over the wires, too, to help a little more. But in my experience every motor cable that has a spring over it just has that spring vibrate it's way loose up the harness. A zip tie or two might help fix that, but I didn't try.
