Would you say "it's just an insect swarm!" if you saw a crawling mass of bugs covering what looks like some weird monstrous scorpion thing? Wizard guys words do not indicate something that is completely indescribable, just something for which a clear definition doesn't easily springs to mind. Otherwise something like the dread linnorm is just a dragon with no wings.
Also note that the guy is in shock, he might be able to give a more accurate description later on, but at that moment he is completely freaked out.
Edit: I just realised we may be imagining this creature differently, when I read the description I don't see a big pile of insects just lying there completely obscuring what is underneath, I imagine that some parts of the scorpion thing are visible some of the time and the pile moving to adjust for the vermiurges subtle movements* so that you get some idea that there is something even more horrible underneath the already quite horrible sight of a mass of insects.
*: I know he is supposed to be just standing there, but that doesn't mean he stands utterly still.