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    The California Earthquake Authority (CEA) is Considering Purchasing Cat Bonds over Reinsurance

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    This year the CEA will buy more reinsurance than in prior years, but the CEA may be casting an eye towards revenue bonds as part of its overall claims-paying resources, believing that a bond program could be more effective than reinsurance.

    The CEA was formed as the result of the 1994 Northridge earthquake which caused a flood of insurers to abandon that coverage in California. Not withstanding the availability of this coverage through the CEA, it is estimated that only 10% of property owners avail themselves of this cover. The CEA estimates a savings of more than $3 million a year through bond purchases.

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