Newly introduced legislation from Sen. Bill Nelson (D-Fla.) would have the U.S. Treasury guarantee bonds issued by the Florida Hurricane Catastrophe Fund as well as funds in Louisiana and Texas, and California's earthquake insurance pool.

Nelson said S. 886 would, for the first time, bring the interests of all four states' backstop funds together under one legislation. Under the legislation, Treasury would cover the funds' bond obligations in the event of a default, a guarantee that would provide greater security to investors. The bill would also guarantee bonds issued by Florida's Citizens Property Insurance Corp.

In February, Nelson introduced the Homeowners’ Defense Act of 2009. The bill, S. 505, would establish a National Catastrophe Risk Consortium, which would inventory catastrophe risks of state reinsurance and residual plans, issue catastrophe bonds linked to the risks of its members and provide research and analysis.

May 5, 2009