One Billion People More Resilient
temperature sign
Search and filter policy solutions using the Heat Action Policy Tool.
Policy Solution

Catastrophe (CAT) bond

Funding and Financing


Funds are paid to an insurer when a pre-determined index is triggered like an extreme weather event. Proceeds from the CAT bond are put in a collateral account and only released if the trigger event occurs. If a payment is triggered, typically interest and principal repayment obligation are deferred or forgiven.


Use CAT bonds to provide long-term financial protection against climate-related risk. One example is a Resilience Bond, which links catastrophe insurance to infrastructure investments using insurance savings as revenue to fund resilient infrastructure projects.

Considerations for Use

CAT bonds can include interest or repayment discounts to governments that invest in risk-mitigation infrastructure.


  • Climate:

    Cold, Hot/Dry, Hot/Humid, Temperate
  • Policy Levers:

    Funding and FinancingThe allocation of public or philanthropic funding or private financing to implement projects, including risk transfer mechanisms.
  • Trigger Points:

    Preparatory measures (actions to establish authority to act)Actions to establish/ensure the authority to act when appropriate trigger-points occur.
  • Intervention Types:

  • Sectors:

    Disaster Risk Management

Case Studies


  • Target Beneficiaries:

    Business owners, Property owners, Renters, Residents
  • Phase of Impact:

    Risk reduction and mitigation
  • Metrics:

    Proceed amount and allocation


  • Intervention Scale:

    Region, State/Province
  • Authority and Governance:

    National government, State/provincial government
  • Implementation Timeline:

    Short-term (1-2 Years)
  • Implementation Stakeholders:

    City government, Industry, National government, State/provincial government
  • Funding Sources:

    Private investment, Public investment
  • Capacity to Act:



  • Cost-Benefit:

  • Public Good:

  • GHG Reduction:

  • Co-benefits (Climate/Environmental):

  • Co-benefits (Social/Economic):

    Increase property values, Reduce poverty