The California Earthquake Authority (CEA) is discussing the need for either a pre-funded subsequent or second-event funding tower (with risk transfer and reinsurance perhaps a part of it), or the infrastructure for one, that would support its functions after a significant earthquake loss that depletes its claims paying ability.
Recognising the very real risk that a major earthquake could deplete all of its claims paying capacity, from available capital, risk transfer funded by traditional reinsurance and catastrophe bonds, revenue bond capital, policyholder surcharges and industry assessments, the Advisory Board of the CEA has been discussing whether back-up financing and coverage may be needed to enable continuity to be delivered to customers.
It has also recently explored the potential role of parametric triggers within its product offering to customers, as well as, we also understand, within its risk transfer arrangements.
FULL ORIGINAL PUBLICATION HERE