What is an attachment point in reinsurance?

The attachment point is where excess of loss cover starts. Everything up to that amount is the cedent's retention on that basis — per risk, per event, or in the aggregate, according to the wording. Coverage does not "kind of start" near the number on the pricing slide. If the signed wording says USD 5,000,000 any one risk, that is the field. A placing email that said 4 mill is a conflict if it still sits in the pack.

Treaty reinsurance lives or dies on this clause. Quota share has a share, not an attachment. Using attachment language on proportional rows is how small losses get treated as if they were layers.

Cite the page

Fictional walkthrough: ACME Construction Ltd, acme.example. The cedent's per-risk XoL is USD 10,000,000 excess of USD 5,000,000. An ACME ground-up loss of USD 8,200,000 therefore leaves USD 5,000,000 with the cedent and USD 3,200,000 with the layer, subject to other clauses (coinsurance on the original, deductibles, hours). If a technician books recovery as if attachment were USD 4,000,000 from a pricing memo, the layer is charged USD 4,200,000. That extra USD 1,000,000 is not market movement. It is a wrong field.

ACME's occurrence limit on Slip.pdf page 2 is USD 10,000,000. That is the underlying limit, not the reinsurance attachment. Attachment is on the treaty or facultative XoL slip. Do not use TIV as attachment. Slip TIV USD 42,000,000 and SOV USD 47,100,000 are schedule totals. They do not tell you where the layer starts. Source-grounded extraction that emits "attachment 10 million" because that number appeared on the facultative slip has grabbed the wrong span.

Per-event catastrophe attachment is a different sentence: aggregate of losses from one event, plus hours and event definition. Per-risk attachment on ACME's warehouse fire is not the cat attachment on a wind year. Reinsurer operations should label which attachment was applied on the claims row.

Deductible, retention, and original policy

The original ACME policy may have a deductible of USD 100,000. That is not the reinsurance attachment unless the wording says the layer sits excess of original deductibles in a stated way. Ground-up versus deductible-in-ground-up is a definition. If the claims bordereau reports net of original deductible and the treaty expects ground-up, attachment tests will fail.

Index clauses, drop-down, and franchise deductibles change the test. Extract them. Do not apply a simple "loss minus 5 million" spreadsheet to every ACME row.

Exhaustion is the next number

Attachment plus limit is the exhaustion point of that layer. For USD 10,000,000 excess of USD 5,000,000, the layer is used up when allocated loss hits USD 15,000,000 ground-up on that basis, or when the layer has paid USD 10,000,000. Reinstatement, if any, is a separate clause. Booking past exhaustion because "ACME is a large account" is not attachment logic.

If two documents disagree — wording USD 5,000,000, endorsement USD 7,500,000 from 1 July — the live attachment cites the document that governs the loss date. Showing both spans is the job. Picking the lower one to be conservative without recording the pick is still a hidden choice.