A stacking of several insurers across successive layers of cover to reach an overall limit that none would carry alone.
An insurance tower refers to the structuring of large-scale cover into several superimposed layers, each carried by one or more insurers, in order to reach an overall limit that no single player would agree to guarantee alone. At the base of the tower sits the primary insurer, which responds first up to its layer, followed by the excess insurers, each responding only once the layer below is exhausted. This architecture allows a very large risk to be spread across several balance sheets, capacity to be diversified and competition to be brought to bear layer by layer, the higher layers, less exposed, pricing at decreasing rates. It is common for large corporate risks, in liability, property, directors and officers cover and, increasingly, cyber, where the limits sought by large organizations far exceed any single insurer's appetite. Managing a tower raises issues of consistency, because cover terms can differ from one layer to another, and a major loss tests the solidity of the whole edifice, right up to the highest layers one hoped never to call upon.
A multinational builds a two-hundred-million-euro cyber tower, made up of a twenty-five-million primary layer and several excess layers written by different insurers, each responding only once the previous one is exhausted.
tour d'assurance, insurance tower, programme par couches, layered programme