Catastrophe bonds may join tokenization rush, with plans for test issuance in 2027Harneys, a law firm whose specialties include advising on alternative risk-transfer products including cat bonds, and droppRWA, a Bermudas-based platform that is helping Saudi Arabia tokenize its economy, plan to issue what they say will be the first catastrophe bonds whose ownership is recorded directly on a blockchain, with a first deal targeted for early 2027.
Catastrophe bonds are specialized insurance products that pay out when major disasters, such as hurricanes or earthquakes, occur.“Under the structure the firms have developed in Bermuda, the investor would hold legal title to the bond,” — Henry Tucker, partner and global head of trusts and private wealth at Harneys, said.
Catastrophe bonds are a $65.6 billion market used by insurers, reinsurers and government entities to transfer a portion of their exposure to natural disasters to capital market investors. The investors receive coupon payments, typically a floating money-market return on the collateral plus a risk spread, but have to pay out if a qualifying event occurs. That attraction is returns uncorrelated to financial markets, economic cycles or political events.“The issue isn’t whether you can put a catastrophe bond on a blockchain,” — said Edwin Mata, CEO and co-founder of tokenization firm Brickken.
“It’s whether the blockchain becomes the legal ownership record. If it does, transferring the token transfers legal title. If it doesn’t, you are only moving a digital version of an asset recorded somewhere else.”
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