CAT Bonds: A Suitable Systemic Approach for Handling Catastrophic Risks in the Czech Republic?

Petra Tisová, Eva Ducháčková and Bohumil Stádník

Prague Economic Papers, 2023, vol. 2023, issue 6, 608-627

Abstract: Catastrophic natural events in the Czech Republic have always caused a considerable burden on public finance. However, this risk can be transferred to capital market investors through CAT bonds, which have never been used for this purpose in the Czech Republic. The paper deals with the theoretical background of CAT bonds, resulting in a back test simulation of a hypothetical CAT bond issued for the period 1999-2003. As a result, by transferring the risk to the capital market, investors could save a significant part of the Czech Republic's public funds.

Keywords: CAT bonds; insurance; reinsurance; government's expenditures; catastrophic events (search for similar items in EconPapers)
JEL-codes: G22 G30 H50 H82 H84 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.18267/j.pep.844

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