rier, the insurance industry is a key stakeholder in the system, collaborating with other national programs For more severe events that would exhaust the retention layer, composed of the ex-ante Budget al- location and of the Reserve fund, the proposed strategy includes a risk transfer instrument. The in- strument is designed as a nation-wide area-yield index insurance per product. The attachment point and exhaustion point are expressed in millions of euros, although the underlying risk is linked to production, because the yield is the only stochastic variable considered. The triggers are linked to attachment and ex- haustion probabilities of 5% (on top of the risk retention layer) and 1%, respectively. The ceding percentage is 100% for all products. The Technical Premium (TP) is estimated as the Average Annual Loss (AAL) plus an The total Limit of the illustrative risk transfer instruments is EUR 5,666 million?4, while the esti- mated Technical Premium is around EUR 256 million or 4.53% of the Limit (Error! Reference source not found.). The Technical Premium was rated on a per-product basis (i.e., it does not consider diversifi- cation) and does not include other loadings such as operational costs, shareholder profits, etc. Should this insurance cover be included into the DRF strategy for Italy, the final pricing of the instrument willbe dif- ferent for several reasons: (1) risk takers (e.g., insurers) will include additional loadings, (2) diversification among products in Italy may reduce the uncertainty loading, (3) potential risk pooling among countries in the EU could provide additional diversification benefits. Furthermore, placing insurance at a national level might reduce costs and increase the government's negotiating power to obtain lower prices. The illustrative risk transfer mechanism is structured at national level (i.e. a “macro-level" tool) and they should be conceived to be complementary for the government, the two instruments are separate and payouts, which are higher for the farm-level program and lower for the national-level product, which is 34 This is the maximum potential payout that could be triggered. However, notice that the probability of a full payout is extremely small because of the diversification among products (e.g., in the 100,000 simulated scenarios, the maximum payout was EUR 3,525 million, only around 62% of the Limit).