Research Of CAT Bond And Its Development In China

Catastrophe risk is a kind of risk caused by some human factors or by some natural calamities, such as floods, earthquakes, and hurricanes. These kinds of risks often bring huge insurance claims to influence the stability of insurance companies. Near more than ten years, both the emergence frequency and the loss of the catastrophe show the ascendant trends in the global range. The traditional reinsurance has not been enough to meet insurance market demand of catastrophe. In this case, the catastrophe bond has been produced.Catastrophe bond is one of the most important innovations in the international field of risk management in twenty years. Through the catastrophe bond, risk is transferred from insurance market to capital market. Risk can break the limit of the insurance market and be scattered in the wider capital market. Now vast investors can share the catastrophe risk, which was easy to cause the crisis of insurance market before. Besides expanding the capability of bearing the risk, catastrophe bond also offers a new kind of investment tool with high return and 0- β risk for investors.China is the kind of country that is exposed to many kinds of calamities such as earthquakes, floods and droughts. But so far our country has not built an effective system to prevent and scatter the catastrophe risk. And our insurance market is not perfect enough to play a big role. The huge loss of calamities has to be undertaken by country and people. Catastrophe bond opened up the new thought for our country.In my thesis, I analyze some questions of catastrophe bond, such as the reason of its production, operation principle, advantage and disadvantage, etc. And combining with the actual conditions of our country, I analyze the necessity and feasibility of the catastrophe bond in China. I draw a conclusion that catastrophe bond is the most suitable instrument for China and design the actual process of catastrophe bond.