Catastrophe Bonds: The New Insurance

Disastrous bonds are a new type of insurance securitization that is becoming increasingly popular in the insurance industry throughout the 21st century. Unlike traditional reinsurance products, Cat Bond says, "Fixed income products primarily issued by insurance companies and reinsurers as a way to be potentially exposed to huge financial risks related to natural disasters" (Ip )is. In the form of insurance related security. These securities are designed to protect insurers and reinsurance companies from "super" disasters or severity but less frequent incidents with a probability of about 1% or 1 year.

A devastating bond is similar to an insurance contract. Recently, in an interview with Bloomberg Radio, Risk Management Solutions Danielstander said, "Risk-related security to transfer various risks from bond issuers to investors. If qualified events occur, investors clearly invest I lose the principal and the issuer will receive the funds to cover the expected loss. "

The condition of CAT bonds is that in principle, if the issuer suffers a disaster, the insurance company will pay the claimant with that money. But, without disasters, they are obliged to pay coupons to investors. According to the article "Insurance Daily", CAT bonds become "mainstream" and investor growth brings high return on debt investment (up to 5%), which is almost half of the world's government or corporate bond yields .

Insurance was created to organize organizations from disasters and unexpected accidents, but corporate bonds can protect individuals who receive services from the fact that the company did not complete the contract. You only have to pay insurance in cash when you need it, and the bonds are funds that must be repaid. Normally bonds are prepaid. When you search and receive deposits, you pay premium in advance. This premium varies depending on the bonds, but it may vary from 0.5% up to 2% of the contract amount, depending on the project period, size, type, and contractor. Online reputation

There is a last, somewhat terrible idea about block chain settlement of cat bonds. We can treat block chain payment as a hedge against the insurance company itself. Even if the disaster is so large that the insurance payment system is even invalidated, the distribution ledger can still run without human involvement. Crisis bonds reduce asset risk and block chains can solve settlement risk. This tweet was issued after the cards threatened to break the long-term commitments of both parties to disarmament, seeking a new "arms race" to "strengthen and expand our nuclear weapons." The threat of the US president to eliminate nuclear extinction in an early morning tweet is of course worrying - Mr. Trump 's remarks on North Korea may seem unnatural or even favorable - but this is a precedent There is little nothing nothing.