This has worked perfectly OK for many years with a PPL doing a checkout and the person being checked logging the time
For many years insurance was not a legal requirement.
These days there is no legal option of flying uninsured - intentionaly or not.
If the insurance policy (through the group rules?) has a requirement that only pilots who meet certain requirements can be PIC then until they meet those requirements they can not be PIC.
If a requirement was that they were "checked out" by another group member then until that checkout was completed they are not complying with the policy if they are PIC.
Just because one can't remember an insurance company refusing a payout because of this situation does not mean that a) it has not happened and b) it will not happen in the future.
In this case, it is very simple to ensure that the insurance company has less of a chance to back out of any payout.