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🏗️ '''Layered programme''' is a [[Definition:Reinsurance | reinsurance]] or [[Definition:Insurance programme | insurance programme]] structure in which the total [[Definition:Coverage | coverage]] for a [[Definition:Risk | risk]] or portfolio is divided into horizontal bands — called layers — each with its own [[Definition:Attachment point | attachment point]], [[Definition:Policy limit | limit]], and set of participating [[Definition:Insurer | insurers]] or [[Definition:Reinsurer | reinsurers]]. The approach is fundamental to how large and complex risks are distributed across the global insurance market, enabling capacity that no single carrier could provide alone. Layered programmes are ubiquitous in [[Definition:Property catastrophe reinsurance | property catastrophe]], [[Definition:Excess of loss reinsurance | excess of loss]], [[Definition:Liability insurance | liability]], and [[Definition:Directors and officers (D&O) insurance | D&O]] placements worldwide.

⚙️ A typical programme stacks several layers on top of a [[Definition:Retention | retention]] (the amount the [[Definition:Cedant | cedant]] keeps for its own account). The first layer — often called the primary or working layer — sits immediately above the retention and absorbs the most frequent losses, carrying a higher expected [[Definition:Loss ratio (L/R) | loss ratio]] and therefore commanding a proportionally higher [[Definition:Rate on line (ROL) | rate on line]]. Successive layers (second excess, third excess, and so on) attach at progressively higher thresholds, responding only to larger or [[Definition:Catastrophe loss | catastrophic]] events; their pricing reflects the decreasing probability of attachment. [[Definition:Broker | Brokers]] — particularly in the [[Definition:Lloyd's | Lloyd's]] and Bermuda markets — negotiate each layer independently, often placing them with different panels of reinsurers. The [[Definition:Lead underwriter | lead underwriter]] on each layer sets the terms, and following markets may subscribe to varying [[Definition:Line | lines]]. In some markets, such as Japan's [[Definition:Earthquake insurance | earthquake]] pools, layered structures are embedded in public-private partnerships with governmental backstops occupying the highest layers.

📐 The strategic value of a layered programme lies in its flexibility: cedants can tailor their retained risk appetite precisely, choose different partners for layers that suit each reinsurer's risk appetite, and adjust individual layers at renewal without restructuring the entire programme. This granularity also enhances price discovery, since each layer's terms reflect its unique [[Definition:Expected loss | expected loss]] profile and market supply-demand dynamics. For the broader market, layering enables efficient capital deployment — lower layers may attract traditional reinsurers comfortable with attritional frequency, while remote upper layers increasingly draw [[Definition:Insurance-linked securities (ILS) | insurance-linked securities]] investors and [[Definition:Catastrophe bond | catastrophe bond]] sponsors seeking low-frequency, high-severity exposure. However, complexity introduces coordination risk: disputes can arise over [[Definition:Loss allocation | loss allocation]] across layers, and gaps or overlaps between layers — sometimes called [[Definition:Drop-down coverage | drop-down]] issues — require meticulous [[Definition:Programme design | programme design]].

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Excess of loss reinsurance]]
* [[Definition:Attachment point]]
* [[Definition:Rate on line (ROL)]]
* [[Definition:Retention]]
* [[Definition:Working layer]]
* [[Definition:Insurance-linked securities (ILS)]]
{{Div col end}}

Definition:Layered programme - Revision history

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