in reality it's more complex than that.
welsh children playing rugby in Wales will be covered by the WRU's catastrophic injury insurance, even if there is a rogue English ref in charge. That's the whole point of insurance : it covers them for all injuries, including those caused by negligent or rogue officials.
Now, having said that, the club who appointed him may well be laying themselves open to an action for making such a negligent appointment etc etc -- but the kids with the catastrophic injury will be get their payout.
(Rider -- of course Marc is quite correct to say that an English ref should get himself properly appointed if was invited to ref in Wales. The RFU have a permission to ref abroad form, and you'd want that, and you'd want to be on board with the WRU as well. I am not advcocating taking any risks or short cuts. It's just that when people say 'not covered' the situation in reality is more complicated)