Faça tudo em SQL em vez de mudar de contexto para PL/SQL:
INSERT INTO DATA1.FOLDERS
(folder_id,
user_id)
SELECT f1.folder_id,
f1.user_id
FROM DATA1.FOLDERS f1
WHERE NOT EXISTS (SELECT 1
FROM DATA1.FOLDERS f2
WHERE f1.folder_id = f2.folder_id
AND f1.user_id = f2.user_id);