Record $65.6 billion catastrophe bonds shift disaster risk to investors

Some people worry about storms, earthquakes and fires because they can damage homes, roads and whole cities.

Insurance companies help pay for that damage, but the costs can be so huge that one company alone cannot handle them.

So insurance companies came up with an idea called a 'catastrophe bond.'

Investors give money up front, and in return they earn extra money if no big disaster happens.

If a big disaster does happen, the investors' money is used to pay for repairs instead.

It is a bit like betting that a big disaster will not strike.

Investors like this because it can earn them money even when stock markets are doing something different.

In the year to June 2026, a record $65.6 billion worth of these bonds were sold.

New places, such as the Kyrgyz Republic and Tajikistan, are now using them to protect against earthquakes and floods.

India does not have any yet, but the state of Kerala has asked the national government to think about using them.