Preparing for Disaster by Betting Against It. An excerpt:

Not for the first time in New York City, necessity has bred an interesting kind of financial invention.  In the wake of Sandy, the M.T.A. worked with the First Mutual Transportation Assurance Company (F.M.T.A.C.), its “captive” (or in-house) insurer to obtain reinsurance — that is, insurance for the insurer — by issuing the world’s first “catastrophe” bond designed specifically to protect against storm surge.  With extreme weather becoming routine and public resources stretched thin, governments across the world — particularly at the local (and sea) level — are taking note.