The analysis shows that cat bond issuance has grown steadily, reaching record levels in 2025, but remains small relative to global disaster losses. Coverage spans a wide range of perils, with recent issuance responding to specific shocks — most notably a surge in wildfire-related capacity following the 2025 Los Angeles fires.
Pricing has also shifted higher over the past five years, and historical returns have been strong. This suggests that the cost of catastrophe protection currently exceeds realised losses — or that markets are anticipating more severe losses ahead.
We also examine the holders of these instruments and find that a significant share of outstanding cat bonds sit in ESG- or sustainability-labelled funds. This points to a potential engagement opportunity: sustainable investors could use their capital to shape which risks are insured, where coverage is expanded, and how adaptation and resilience efforts are rewarded through better pricing.
