The pollution flashover of composite insulators is mainly the flashover caused by alternate occurrence of arc development and dry band formation. At present, researchers have investigated the development of insulator arc along the surface. However, the formation mechanism and process of the dry band have not been fully analyzed due to its stochastic property. In this paper, the generalized finite difference time domain method is used to calculate composite insulators' surface electrothermal coupling field. The dry band formation and arc development are modeled to study the mechanism of the dry band influencing arc formation and the optimization strategy of insulator dimensions. Meanwhile, the flashover experiment of composite insulators under contaminated conditions is carried out. The experimental results are compared with the simulation results to verify the accuracy of the simulation model. The results show that the generalized finite-difference time-domain method is suitable for multi-field calculations near the insulator for its effectiveness in reducing computational complexity. Furthermore, dry band is more likely to generate where is close to the electrodes of insulators. Therefore, probability of flashover is decreased by insulator geometry optimization with no changing the insulator's creepage distance.