Why the catastrophe bond market is growing

The bonds pay for climate change disaster damages

Photo collage of money, a bar graph, a piggy bank, and imagery of natural disasters
CAT bonds are mutually beneficial for insurers and investors looking to make investments free from market forces
(Image credit: Illustration by Julia Wytrazek / Getty Images)

Catastrophe bonds are a growing form of investment that can be used to fund recovery from damage in climate-related disasters. Their structure can be attractive to both issuers and investors, but these bonds may not be as effective at covering damage as they promise.

What are catastrophe bonds?

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Devika Rao, The Week US

 Devika Rao has worked as a staff writer at The Week since 2022, covering science, the environment, climate and business. She previously worked as a policy associate for a nonprofit organization advocating for environmental action from a business perspective.