In 2025 so far, $18.6 billion has been spent on catastrophe bonds, which help ease the impact on insurers when natural disasters occur. Cat bonds spread the risk to outside investors, preventing insurers from being wiped out by a single event. Dr. Robert Hartwig, a professor at the University of South Carolina, remarks that “Insurance prices would be much higher today without cat bonds.” The biggest current risk to investors is hurricanes. The cat bond market was created in response to Hurricane Andrew in 1992. Today, about 70% of the risk covered by these bonds is tied to major hurricanes in U.S. states such as Texas and Florida. Hurricanes are typically well understood and predictable; however, ‘secondary peril’ events—including hail, floods, and wildfires—are harder to manage. To read more about the catastrophe bond market, click here.