and does not include other loadings such as operational costs, shareholder profits, etc. Should this insur- ance cover be included into the DRF strategy for Italy, the final pricing of the instrument will be different for several reasons: (1) risk takers (e.g., insurers) will include additional loadings, (2) diversification among 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 capacity of the ex-ante Budget allocation. In the framework of the DRF strategy, it is important to distin- guish between this risk transfer mechanism and the subsidized farm-level insurance programs. Although they should be conceived to be complementary for the government, the two instruments are separate and have different purposes. In particular, they differ with respect to the targeted risk levels and frequency of payouts, which are higher for the farm-level program and lower for the national-level product, which is