Yes, for a character to be rendered brain dead or permanently insane you must reach the negative value as it is with Body.
There is permanently insane (ie negative value of your Soul Statistic) and there are Permanent Insanities. They are not the same thing. A character who wintesses someone explode into powder in front of them and gets coated in gore from it, can gain a Permanent Insanity, as is seen in the Fear and Insanity section. Someone who has a mage rip out there soul using a mastery that does damage to soul, can end up permanently insane (ie unplayable). It’s possible to play someone with blackouts, or other derangements, however it’s not possible to play someone who remains huddled in a fetal position gibbering to themselves until they die of starvation or dehydration.
One thing you have to recall here. You the player, live in a world where things have been put under a microscope and examined to death for over a hundred years, you live in a world with mass media that greatly desensitizes you to the tragedies and atrocities that exist out there. It’s also a whole lot easier to say “Well my character isn’t afraid of a bear” than to actually have a bear five feet away from you growling, desensitized or not. Your character lives in a time where everthing was not explained down to the molecule and de-mystified. superstitions still run rampant, as does belief in things unnatural. With that belief comes the fear of them.
I understand that players dislike being told they will react a certain way, but that’s just the way of it, and if you accept it and roll with it, it can be pretty entertaining and often even fun. You are playing in a place and time where brandishing a firearm in public could get you hung for what amounts today as terrorism. A time when just 300 years previous the Catholic Church itself recognized the existance of Supernatural Creatures, Werewolves and Vampires among them, and burnt over 100,000 people at the stake for it. Parents scare their children into behaving with tales of Spriggan and Banshee, and violent crime as we know it barely exists outside of war.
If you were to travel in time, pick some random person off the street in Victorian London and bring them to your house, they would be horrified, shocked, and reviled to the point of catatonia within the hour.
This is where roleplaying come in. You are not playing you in Victorian London, you are playing a character from Victorian London, from those times, and accustomed to those ways. If a character were to see someone shift into some great huling beast with 3 inch fangs and 4 inch claws, they would sit there drinking their coffee pointing out to their date that someone should do something about the bears in the city. This game is darker, more gritty, and the Fear and Insanity sections are there to assist to that. It’s not a matter of what *you* are afraid of, it’s a matter of what your character is afraid of.