The article discusses how combining reinsurance with new financial instruments can help provide coverage for people living in areas prone to natural disasters. By using catastrophe bonds and reinsurance together, the cost of protection can be reduced. The researchers suggest six principles for designing systems to transfer catastrophic risks and propose ways to expand coverage and lower costs. The insurance industry has been reevaluating its ability to cover all properties in hazard-prone areas after large losses from events like Hurricane Andrew and the Northridge earthquake. New institutions and financial instruments have been developed to address these challenges, with the expectation that they will play a larger role in the future.