my UE monitors suffered the same fate. stripped insulation near the earpiece, but still working at about 2 1/2 years old.
looks to me like the thin, inner signal wire stretches more than the thicker braid which is the earth. this allows the braid to bunch and cut through the sheath where it bends as it enters the earpiece.
currently with UE being replaced at a cost of £45.
i have just got my UE monitors back and it appears that they now have reinforcing on the problem area of the first bend out of the ear: