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Catastrophe Bonds: A Primer and Retrospective

Author

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  • Andy Polacek

Abstract

Since 1997, the catastrophe (CAT) bond market has provided the insurance industry with protections against natural disasters that have grown more frequent and costly. This article explains how CAT bonds work, and then looks at how the market for them has grown in size, coverage, and sophistication over the past two decades. It also explores how and why different types of institutions use CAT bonds to transfer insurance risks.

Suggested Citation

  • Andy Polacek, 2018. "Catastrophe Bonds: A Primer and Retrospective," Chicago Fed Letter, Federal Reserve Bank of Chicago.
    • Handle: RePEc:fip:fedhle:00094
    DOI: 10.21033/cfl-2018-405
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    Cited by:

    1. Valeria Terrones & Richard S.J. Tol, 2022. "Relevance of financial development and fiscal stability in dealing with disasters in Emerging Economies," Working Paper Series 0722, Department of Economics, University of Sussex Business School.
    2. Karl Demers-Bélanger & Van Son Lai, 2019. "Diversification Benefits of Cat Bonds: An In-Depth Examination," Working Papers 2019-008, Department of Research, Ipag Business School.
    3. Lorilee A. Medders & Steven L. Schwarcz, 2022. "Securitizing pandemic‐risk insurance," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 25(4), pages 551-583, December.
    4. Raluca Maran, 2023. "Drivers of sovereign catastrophe bond issuance: an empirical analysis," SN Business & Economics, Springer, vol. 3(6), pages 1-20, June.

    More about this item

    Keywords

    insurance; bonds; bond markets;
    All these keywords.

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