From the Merriam-Webster Unabbridged:
Main Entry: ger·und Pronunciation Guide
Inflected Form(s): -s
Etymology: Late Latin gerundium, from Latin gerundus, gerundive of gerere to bear, act, perform -- more at CAST
1 : a verbal noun in Latin that occurs in the genitive singular, dative singular, accusative singular, and ablative singular and that expresses the action of the verb as generalized or in continuance <in Latin ars vivendi "the art of living" and fratrem laudando "in quoting your brother", vivendi and laudando are gerunds>
2 : any of several linguistic forms in languages other than Latin that are felt to be analogous to the Latin gerund; especially : the English verbal noun in -ing that has the function of a substantive (as subject or object of a verb, object of a preposition, or complement of a verb) and at the same time shows the verbal features of tense and voice (as choosing, having chosen, being chosen), capacity to take adverbial qualifiers, and capacity to govern objects when the verb is transitive and that may have a subject in the objective or common case but often takes in place of a subject a possessive qualifier denoting the agent of its action especially in literary use and when the agent is a pronoun or a noun denoting a person or persons <in the sentences "I am surprised at his taking the matter so lightly" and "he left without anyone in the room noticing his departure", taking and noticing are gerunds> -- see 3-ING
"Insulting" comes from "to insult". Although a verb in form, it is used in your example as a noun. "Insulting" doesn't mean "insult", rather it refers to the action of insulting. "I didn't understand his insulting" doesn't mean "Nao entendi o(s) insulto(s) dele", but rather "Nao entendi o fato que ele estava insultando" or "Nao entendi porque ele estava insultando."