A Study on the Catastrophe Bonds

Catastrophes occur in many parts of the world. Catastrophes can cause serious damage to individuals, the environment, and the economy. With the gradual increase in catastrophes, great economic losses are experienced and the vulnerability of countries to catastrophes negatively affects the economies of the countries. Catastrophe bonds, which are a new financial instrument for developing innovative solutions in the financial sector, are important in minimizing the negative effects of catastrophes in countries and in managing catastrophe risks. Catastrophe bonds, a form of insurance-linked securities (ILS), are considered an important tool to transfer catastrophe risks to capital markets, strengthen the financial resilience of countries against the effects of catastrophe risks, and support sustainable economic development. This study, it is aimed to examine catastrophe bonds, which are a new financial instrument, and to evaluate their effects on the financial sector. Secondary data used in the study were analyzed by content analysis. According to the results of the research, it is seen that there is a need for catastrophe bond issuances as the number of catastrophes increases. In this direction, catastrophe bond issuances should be increased for effective management of catastrophe risks. It is evaluated that with the increase in catastrophe bond issuances, rapid financing will be provided to governments and businesses by sharing risk, financial stability will increase in financial markets, and the process of returning to normal lives after the catastrophes will accelerate.