Principles of Reinsurance Contract Law (PRICL)

What is PRICL and when can it be used in a reinsurance contract?

PRICL, which stands for Principles of Reinsurance Contract Law, was produced by a team of academics and practitioners in cooperation with UNIDROIT (the International Institute for the Unification of Private Law), supported by a (re)insurance market advisory group. The first edition was released in 2019 and the most recent update of PRICL was officially launched at Lloyd’s on 3rd November 2025. 

Broadly, PRICL sets out a list of uniform rules which can be adopted to govern a reinsurance contract. Whilst PRICL suggest that the Principles could stand as the equivalent of the governing law of the contract (something which the English courts would not recognise, but which could potentially work in an arbitration, depending on the terms of the contract and the seat of the arbitration), the Principles can alternatively be incorporated (in whole or in part) into an English (or other) law governed contract. Article 1.1.5 of PRICL specifically notes that:

“Application of the PRICL shall not restrict the application of overriding mandatory rules, whether of national, international or supranational origin, where applicable.”

Where it has not been possible to negotiate for English governing law for the reinsurance contract, PRICL can supply terms to cover issues which have not yet been determined by the relevant legal system. 

The PRICL website presents the Principles as follows:

“Reinsurance law presents many challenges. A particular challenge is the lack of legal certainty in many national legal systems, which is exacerbated by the lack of uniformity. In pursuit of looking for a solution, academics and practitioners have joined forces to develop Principles of Reinsurance Contract Law (PRICL) providing the reinsurance market with uniform soft law rules which are ready to be used in practice.”

What is PRICL?

PRICL covers issues such as the duties of the parties to a reinsurance contract, remedies, loss allocation and aggregation, coverage and duration. A core purpose behind PRICL is that it could be used to fill in the gaps where governing law is not conclusive on a reinsurance issue.

As one example, in the last article in our series, we referred to uncertainties which remain under English law in relation to the back-to-back principle of proportional reinsurance (such as exactly which terms will be incorporated from the direct insurance contract into the reinsurance, the precise scope of Wasa v Lexington [2009] UKHL 40 and what is a “fundamental” term of the reinsurance contract).

PRICL does not apply a back-to-back presumption but instead refers to terms “which are material to the scope and extent of cover” as terms which are incorporated into the reinsurance contract. PRICL then provides a non-exhaustive list of the type of clauses which fall within this definition. 

This approach aims to prevent reinsurers from running a defence based on the interpretation of incorporated terms by deeming that a term in the direct policy which is interpreted by a court or arbitrator will be interpreted in the same way as the term incorporated under the reinsurance contract.

Is PRICL necessary if a reinsurance contract is governed by English law?

PRICL is probably most beneficial to provide contractual certainty to parties to contracts governed by a legal system which does not have an established corpus of reinsurance law. As mentioned in our earlier articles, English law has a distinct body of reinsurance case law which has resolved many common disputes and, indeed, many of the principles set out in PRICL are derived from English law. 

Nevertheless, uncertainties remain and many reinsurance disputes are now arbitrated, which means that there may be no binding precedent to finally resolve an issue which keeps cropping up. That, in turn, leads to the expense and time of further disputes. PRICL terms could have a role here.

Arguably, PRICL may be most beneficial when it is used as an aide memoire for reinsurance underwriters. PRICL flags up important issues and prompts consideration of appropriate terms for the particular contract that is being written. 

Whether incorporation of PRICL is suitable or not (in whole or in part) and its basis of incorporation is something which may need input from legal advisers to ensure that no unintended consequences arise within the context of any overriding national law.