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🏗️ '''Vertical placement''' is a method of structuring an [[Definition:Insurance program | insurance]] or [[Definition:Reinsurance | reinsurance]] program in which multiple layers of coverage are stacked one on top of another, each attaching at the point where the layer below exhausts. In contrast to [[Definition:Horizontal placement | horizontal placement]] — where several insurers share a single layer side by side — vertical placement assigns each participating [[Definition:Insurance carrier | carrier]] or [[Definition:Reinsurer | reinsurer]] its own distinct band of exposure defined by an [[Definition:Attachment point | attachment point]] and a [[Definition:Policy limit | limit]]. This layered architecture is the standard approach for large commercial, industrial, and specialty risks where no single insurer is willing or able to absorb the full tower of potential loss.

⚙️ A typical vertically placed program might feature a [[Definition:Primary insurance | primary]] layer provided by one carrier, followed by successive [[Definition:Excess insurance | excess]] layers — often labeled first excess, second excess, and so on — each written by a different insurer or reinsurer. The [[Definition:Ceding company | cedent]] or [[Definition:Insurance broker | broker]] negotiates terms, pricing, and conditions for each layer independently, though [[Definition:Follow-the-fortunes | follow-the-fortunes]] or [[Definition:Follow-the-settlements | follow-the-settlements]] clauses may link upper layers to the primary's claims-handling decisions. In the [[Definition:Lloyd's of London | London market]], vertical placement is deeply embedded in placement practices, with brokers building towers across multiple [[Definition:Lloyd's syndicate | syndicates]] and company markets. Large property [[Definition:Catastrophe insurance | catastrophe]] or [[Definition:Liability insurance | liability]] programs routinely require towers extending hundreds of millions of dollars, and the pricing of each layer reflects its unique position: lower layers face higher expected [[Definition:Loss frequency | frequency]] and command higher [[Definition:Rate on line (ROL) | rates on line]], while upper layers benefit from greater remoteness but carry more severe [[Definition:Severity | severity]] exposure.

💡 The strategic value of vertical placement lies in its flexibility and risk-partitioning efficiency. Insurers and reinsurers can participate in only the slice of the risk tower that fits their [[Definition:Risk appetite | risk appetite]] and [[Definition:Capital | capital]] capacity, enabling programs to be assembled even for extraordinarily large exposures. For the buyer, vertical structuring provides transparency about which carriers respond at which loss levels, simplifying claims recovery when losses pierce multiple layers. However, vertical placement also introduces complexity: disputes can arise about whether a loss has truly exhausted a lower layer, and [[Definition:Erosion | erosion]] of underlying limits can trigger contentious allocation debates. Brokers managing vertical towers must coordinate policy wordings carefully to avoid gaps or inconsistencies between layers — a discipline that remains one of the more demanding aspects of large-account and specialty placement.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Horizontal placement]]
* [[Definition:Excess insurance]]
* [[Definition:Attachment point]]
* [[Definition:Rate on line (ROL)]]
* [[Definition:Insurance program]]
* [[Definition:Layered program]]
{{Div col end}}

Definition:Vertical placement - Revision history

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