Cyber ‘Catastrophe Bonds’ Move Step Closer to Hitting Public Debt Markets

Cyber catastrophe bonds or “cat bonds” may start to enter the public debt markets, using investment capital to insure risks now too costly for conventional underwriting. Beazley is considering a $100m issue, and Axis Capital is preparing to float a $75m bond. Cat bonds, normally backing natural disaster risks, could total $40bn this year, in part due to repercussions of climate change on insurance. Yet, a lack of historical data combined with rising cyber threats are increasing investment risks.