I'm not sure where you'll be living in Canada but this site has a fair bit of information on it
http://www.justlanded.com/english/canada/tools/just_landed_guide/travel_leisure/driving.
I have read posts of people getting their Canadian licenses before PR but it varied from province to province so it is possible but it will depend on where you are going.
As for the insurance issue I would ask my in-laws to contact their insurance broker to find out if they will do it.