Nope, insurabce is not a requirement of the authorities - it is my requirement, someone decides fly is just not cutting it and decides to go swimming half way to Mustique I want to get my plsne paid for, the insurance says a check out - no specifics - just mske sure thd guy kn8ws what he is about.
The pilot to be checked out coukd get in it and legally fly with passengers with no issues - the purpose of the check out us to ensure my $12,000 annual premium insurance pays out if there is an incident.
So having established that it is nothing to do with insurance bring required to be legal - the question - who is P1 during a chdck out - to define the terms - the pilot being checked out has 20,000+ hours more ratings and licences that seems possible; the CFI (oh yes, I did like the diversion inyo what C of CFI means!)has a couple of thousand hours total - both are legal for solo - but the CFI is "banned" (for the pedants, this is in any event bogus) and does not want to breach the ban by bring PIC in the airspace - it will in cause issues, not least the scale of the compensation he'll be getting the longer the ban persists).
For those interested, seems a second CFI got banned here this month - the offence failing to tell a person converting his Canadian licence to get a stamp from the Civil Aviation Department!!