AXCO: Despite Strong Growth in the Catastrophe Bonds Market, Something Seems to be Missing

The catastrophe bonds (cat bonds) market, the vast majority of the insurance-linked securities (ILS), has experienced substantial growth in recent decades, driven by increased (re)insurer demand for alternative risk transfer solutions and investor appetite to diversify their investment portfolios. According to market statistics, cat bonds issuance increased more than sevenfold between 2003 and 2023. There is not just an increase in the number of cat bonds issued; coverage has also expanded from natural catastrophes to human-made disasters such as terrorism and cybersecurity events.

However, the regulatory landscape does not appear to be keeping pace with this significant market development. As catastrophe bonds have gained traction worldwide and their importance continues to grow, their potential impact on the financial system is undeniable. In this article, we will examine the current regulatory framework across different regions and shine a spotlight on any potential gaps in the current legislation.

FULL ORIGINAL ARTICLE HERE

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