Resilience Bonds

Summary

New catastrophe bond-like product aims to promote investment in resilient infrastructure and generate "resilience rebates" for projects that reduce economic losses from disasters. The idea is to link insurance coverage that public sector entities can already purchase (such as catastrophe bonds) with capital investments in resilient infrastructure systems (such as flood barriers and green infrastructure) that reduce expected losses from disasters. This connection between insurance and infrastructure is important because just as life insurance doesn’t actually make you physically healthier, catastrophe bonds do not reduce physical risks and only payout when disasters strike.