Not wanting to get caught with its pants down by another Superstorm Sandy, the Metropolitan Transportation Agency announced today that it’s picked up $200 million in insurance money that will help pay for future repairs in the case of similar weather disasters. The MTA says this opportunity, provided by “catastrophe bonds” through the special purpose insurer MetroCat Re Ltd., will be the first time it’s used capital markets to manage its property damage risks.
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“In the aftermath of Superstorm Sandy, the traditional avenues we use for insurance and reinsurance contracted dramatically, making it exceedingly difficult for the MTA to obtain insurance,” said Thomas F. Prendergast, MTA Chairman and CEO. “But as a result of this savvy and novel reinsurance arrangement, we are now in a stronger position should our area, God forbid, face another large-scale storm-surge event within the next three years.”
The new insurance policy comes with a catastrophe bond to solely protect against storm surges – most likely in reaction to the massive flooding that occurred in the NYC transit system. The long and short of this is that the MTA is prepared to pay for flooding damage in the event something similar happens again.
Photos from Imgur, Andrea Booher (This image is from the FEMA Photo Library.) [Public domain], via Wikimedia Commons and by Sugar Pond (http://flickr.com/photos/sugarpond/858527503/) [CC-BY-SA-2.0], via Wikimedia Commons