Prof Birgit Kuschke a member of Principles Drafting Committee of Transnational Insurance Law

Posted on November 11, 2016


In 2015 Professor Birgit Kuschke, from the Department of Private Law in the Faculty of Law at the University of Pretoria, was invited to serve as one of only 15 principle members (selected from 14 academic institutions in the EU, the US, Japan, Singapore, Brazil and South Africa) of the International Drafting Committee of the universal Principles of Reinsurance Contract Law (known as PRICL), under the auspices of the University of Zürich, Switzerland.

The aim of the project is to draft PRICL within the scope of a research network to be established, headed and coordinated by the applicants, Prof Helmut Heiss and Prof Anton K Schnyder (both from the University of Zürich), Prof Martin Schauer (University of Vienna), and Prof Manfred Wandt (University of Frankfurt am Main). For this purpose, a Principles Drafting Committee (PDC) was established, made up of academics from countries with leading insurance sectors and representing as many legal families in the world as possible. The PDC is advised by an Advisory Group Reinsurers and an Advisory Group Direct Insurers. Brokers and representatives of Lloyds of London also participate in the project.

Reinsurance law is a form of supranational law which entails that the obligations in a direct or primary insurer's policy portfolio are transferred to a reinsurer. Reinsurance can be proportional or non-proportional. The contract provides for the reinsurer to pay for the loss sustained by the insurer when the latter performs its obligations to its policyholders. The reinsurance industry became more popular during the late 1990s and early 2000s because natural disasters and mass tort litigation (civil wrongs, with the primary aim of providing relief for damages and deter others from committing the same harms) resulted in large pay-outs by insurance companies leading to some insurance companies becoming insolvent. Most insurers reinsure with a small number of large international reinsurers.

Reinsurance is significant to the insurance consumer for a number of reasons. Firstly, reinsurance increases the financial stability of the direct or primary insurers by spreading risk. This increases the likelihood that the primary insurer will be able to pay its claims. Secondly, reinsurance facilitates placing large or unusual exposures with one insurer, thus reducing the time spent seeking insurance and eliminating the need for numerous policies to cover one exposure. This reduces transaction costs for both the policyholder and the provider of the insurance product. Thirdly, reinsurance helps small insurance companies stay solvent, thus providing financial security and increasing competition in the industry. Without reinsurance, small insurers would find it much more difficult to compete with larger ones. [1]


The PRICL should bring about more intensive international academic discourse regarding the law of reinsurance, which represents a globally important financial services sector. This will be achieved by providing a uniform frame of reference and uniform legal terminology.

By utilising provisions of conflict of law, especially private autonomy in arbitration, the PRICL should provide the universal reinsurance industry with the opportunity to design and conclude their contracts on the basis of a single reinsurance contract law, which is uniform and transparent across the world.

In implementing the project, a framework will also be provided for supporting young researchers in this field – in particular, through the creation of post-doctoral and doctoral positions.  [3]

The project is mainly funded by the Swiss National Fund, the Austrian Science Fund and the German Research Association. The first draft was released in October 2015, and the second draft was finalised on 15 October 2016. The final report will be presented in 2018 for international release and publication.


- Author Elzet Hurter

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