There's an option to remove the Necro-demons altogether and replace them with bugs; it wouldn't change much because the politics involve not the undead or bugs, but the people working with them – like Necro-Druids who live in swamps and oversee the creatures. This is the most aggressive faction because the monsters need food and venture into the territory of the living... but I'm too lazy to create a small fly and a large bug, but maybe I'll do it later, who knows. A big advantage of the skull-demons is that they are simple.
In my lore for "Heroes 5," Druids are elves who can communicate with any animal or creature, which is why they often become masters of various monsters.
In general, I'm a bit afraid of insects, but I have an extraordinary passion for monsters (meaning I like them).