So, digging some more with a friend of mine, it has been figured out that this the default behaviour. It's mentioned here in the .NET MAUI documentation by Microsoft
On iOS 16.4+, simulators won't load a splash screen unless your app is signed.
So to make the launch screen work you have to apply a workaround for which there are currently two options.
You have to generate signed debug builds.
Install an iOS Simulator with version lower than iOS 16.4.
I have currently used option 2 as I am yet to figure out how to apply option 1. I also made changes to the background colour of the launch screen and it works.