In BSUS 6600 I spend some time talking about the role of catastrophic bonds in managing severe weather disturbances. Cat bonds are potentially an important way to diversify weather related risk. Unlike weather derivatives, that are traded on exchanges, cat bonds are non-traded insurance linked securities. Cat bonds are structured in such a way that insurance payouts are rare. Here is an update of what effect Hurricane Sandy may have on cat bonds.
For those interested in following the cat bond market, Artemis is a useful blog.