Karla Barker 
Natural disasters caused $220 billion in economic losses last year. Insurance covered only $107 billion, according to Swiss Re. The rest fell to households, businesses, and governments. That gap is the backdrop for a new push to tokenize catastrophe bonds, a market that has grown quickly but still leaves many risks uninsured.
Cat bond market keeps expanding
Catastrophe bonds let insurers transfer the financial risk of a hurricane, wildfire, or earthquake to capital-market investors. The market had $65.6 billion outstanding in June. New issuance reached $11.3 billion in the second quarter, the largest quarterly total on record, according to Artemis. That growth shows investors are willing to take on insurance risk when the terms are clear. But it does not mean every disaster risk can be covered. Floods, typhoons, and wildfires remain a problem, especially where claims data is thin and catastrophe models are uncertain.
Uninsured losses remain high
In Asia-Pacific, 91% of disaster losses in 2023 were uninsured, the OECD found. The group also said limited claims data and weak models can make it harder for insurers and reinsurers to price coverage in high-risk areas. That is where tokenized cat bonds may find a use. Harneys, a Bermuda-based law firm focused on global insurance, and tokenization platform dropRWA plan to issue tokenized cat bonds early next year. Each token would represent legal ownership of the catastrophe bond, not a side bet.
The proposal builds on a market that has mostly served specialist funds and large institutions. Many cat bond offerings have minimum investments of $250,000 or more. Harneys and dropRWA are considering a structure that could allow smaller beneficial interests. That would still need to comply with securities, insurance, and investor-protection rules.
Practical uses in high-risk regions
Henry Tucker, chief executive of specialist insurance group Hearns, said a tokenized structure does not turn disaster coverage into a casual retail investment. The capital is fully committed to cover a defined insurance risk. He pointed to flood cover and typhoon protection in Southeast Asia as risks that can be hard to place with conventional reinsurers, particularly when claims data is limited or loss estimates are uncertain. A specialist underwriter could use a tokenized structure to raise capital for a single defined risk and set out the assumptions and the return offered to investors.
There is already a real-world example of cat bonds financing public disaster protection. The World Bank arranged $200 million of hurricane coverage for Jamaica in May. It replaced an earlier transaction that paid out after Hurricane Melissa in 2025. Jamaica’s finance minister, Fayval Williams, called catastrophe bonds an important piece for capital market access in the country’s resilience strategy.
The tokenized version is still early. It may not solve the insurance gap on its own. But if it can lower barriers, improve data sharing, and bring more capital to specific risks, it could help cover losses that currently land on families, firms, and governments.