In my legal understanding, the operator of an aircraft assigns the role of pilot in command to either pilot, if more than one qualified pilot is on board. In this case, it is not clear who the operator is, but based on this insurance issue I guess that it is a club or group owned aircraft. Obviously only club or group members are supposed to fly it, therefore it is only insured to these pilots. So the operator would certaily not assign a non-member as PIC and for the flight above, the pilot in the right hand seat can only log the hours.