Premium
The Evolving Market for Catastrophic Event Risk
Author(s) -
Froot Kenneth A.
Publication year - 1999
Publication title -
risk management and insurance review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.386
H-Index - 16
eISSN - 1540-6296
pISSN - 1098-1616
DOI - 10.1111/j.1540-6296.1999.tb00001.x
Subject(s) - issuer , event (particle physics) , order (exchange) , business , actuarial science , bond , financial economics , risk analysis (engineering) , economics , finance , physics , quantum mechanics
In the last two years, the market for catastrophic event risk has witnessed important change. The first large and truly successful catastrophe (“CAT”) bonds have been issued. New exchanges have opened, traded contracts have been created, and indexes of CAT losses have been introduced. The array of products confronting issuers and investors has widened substantially. This article provides a brief overview of these changes. It also takes a functional approach to diagnosing the problems in the market for CAT event risk in order to understand how future change is likely to occur. Finally, it provides information to companies looking to assess whether these new markets are useful for solving their problems.