He can't but Paypal can, if your Paypal balance is zero, they can even just take it straight out of your bank account as you've given them permission by having the Paypal account.
Have fun trying to actually get the insurance money from Royal Mail.
Unfortunately Paypal always takes the buyers side, otherwise they'll get a bad rep from the odd few who are actually telling the truth. Don't just refund him the money though, go through the dispute process. He might have honestly not recieved them, but atleast it isn't anything too expensive and you've learned from your misstake. Paypal is a nasty piece of work, it's like shitting, we have to go along with it.