REALITY: The private insurance industry has insured wind and earthquake risks, including the unprecedented losses of the 2005 hurricane season.

• Although reinsurershave paid more than 60% of all the losses from Hurricanes Katrina, Rita and Wilma, the capital markets greatly enhanced reinsurance catastrophe capacity following these catastrophes.

Since late fall 2005, an additional $43 billion of new capital entered the reinsurance business to support and underwrite U.S. natural catastrophe risk, including $12 to 15 billion of new securities for catastrophe risk issued by the capital markets.