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

Insurance companies are exploring cyber catastrophe bonds to offload the risk of large-scale cyberattacks. Such bonds, typically used for natural disasters, provide double-digit returns to the investor if the catastrophe doesn’t occur. Insurer Beazley is reportedly planning a $100m cyber catastrophe bond, while Axis Capital plans a $75m bond. Limited historical data increases the risk for the investor. The market for catastrophe bonds is set to reach $40bn this year.