“Cat” bonds are effectively a cheaper source of large-scale insurance coverage against clearly measured risks like earthquakes, storms, or even disease outbreaks. Generally, though, coverage hasn’t trickled down to the poorer and most at-risk countries—precisely those which are most vulnerable when aid fails to arrive or arrives piecemeal. Scaling up this market for lower-income countries would provide better shielding against many risks that undermine development overseas.
Views from the Center
Global Development: Views from the Center features posts from Nancy Birdsall and her colleagues at the Center for Global Development about innovative, practical policy responses to poverty and inequality in an ever-more globalized world.