Attachment Point

Definition - What does Attachment Point mean?

An attachment point is a concept used in the context of reinsurance. It is the amount that a ceding company will pay for a risk. Once the loss exceeds this amount, the reinsurer will step in and pay for the excess.

Insuranceopedia explains Attachment Point

The attachment point is the amount that an insurance company will pay for a risk, as stipulated by state regulation.

The state insurance commissioner sets the amount to make sure that the company is financially capable of covering the risk. For example, if the attachment point of a risk is $100,000, then the insurer cannot promise coverage for a loss beyond that amount. To abide by state regulations, the insurer would have to turn over the excess to reinsurer.

This definition was written in the context of Reinsurance
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