Passage of the California Earthquake Authority (CEA) by the California senate means Bermuda reinsurers will again be asked to commit significant capacity to the first state-run earthquake insurance pool in the US.

The much debated $10.5 billion CEA gained senate approval on Friday.

The measure now needs approval of Governor Pete Wilson, expected to be a formality.

With legislative approval concluded, E.W. Blanch Company executive vice president Jack Graham said: "We're preparing to go back to the marketplace in the next two weeks'' to again secure the plan's reinsurance capacity.

Under the original reinsurance CEA proposal, Bermuda company acceptances totalled $659 million of the plan's $1.8 billion in reinsurance. But those commitments expired in April and companies may have placed the capacity elsewhere.

Accepting over one-third of the CEA's reinsurance needs not only shows the strength of the Bermuda market but also its commitment to the plan.

PartnerRe Ltd. president and CEO Herbert Haag said PartnerRe will continue to support the CEA.

Earlier, PartnerRe was prepared to commit $150 million of reinsurance capacity and Mr. Haag said the property catastrophe reinsurer will now "certainly consider a similar amount.

"I expect many of the participants will, more or less, in a similar fashion (to their earlier commitments) support the CEA.'' Under the original reinsurance plan, PartnerRe was the leader of the lead syndicate which included nine reinsurers. Overall, 171 reinsurers were involved.

"I am pleased there is a solution for California homeowners,'' Mr. Haag added.

The CEA was first proposed in 1994 after the Northridge earthquake.

In the wake of Northridge, many insurers discontinued or limited earthquake coverage.

California insurers are required to sell earthquake insurance with homeowners insurance.

California's real estate market suffered as the state attempted to emerge from the recession of the early 1990s.

It is anticipated the CEA will be operational in the next 60-90 days.

"The (CEA) concepts are no different and the changes to the legislation have been nominal,'' Mr. Graham said.

Personal Insurance Federation of California president Dan Dunmoyer told Bloomberg Business News the CEA passage was a victory for homeowners and businesses.

"Currently consumers are left with few choices when it comes to purchasing homeowners insurance in California.

"The CEA provides the necessary mechanism to create a better marketplace,'' Mr. Dunmoyer said.

CEA critics have called the plan an insurance industry bailout. But the bill requires insurers commit at least $700 million before the CEA becomes operational.

Mr. Dunmoyer said the state of California has no liability from losses resulting from CEA policies.

He also said that the CEA, which is privately funded, provides incentives for smaller insurers to enter California's homeowners marketplace and help increase competition resulting in lower homeowner insurance prices.