Tokenized Catastrophe Bond Targets Disaster-Insurance Gap

Harneys and droppRWA aim to launch a Bermuda catastrophe bond by the first quarter of 2027 using an onchain record of legal title, as disaster losses continue to exceed insured coverage.

The companies announced the plan Sept. 3, 2026, at 5:29 p.m. ET (21:29 UTC). The bond has not been issued and remains subject to regulatory approval. The platform administrator would also need a license under Bermuda’s Digital Asset Business Act 2018.

Harneys and droppRWA say transferring the token would legally transfer ownership of the bond, subject to regulatory approval. They also say Bermuda’s existing legal framework supports the structure without legislative changes.

The tokenization would apply to the bond’s ownership and settlement records, not to the disaster risk itself. Catastrophe bonds transfer defined risks from insurers, governments or other sponsors to capital-market investors. Investors receive interest while losses remain below specified triggers, but principal can be reduced or lost after a qualifying catastrophe.

In 2025, natural catastrophes generated $220 billion in economic losses, including $107 billion in insured losses across 190 events. The outstanding catastrophe-bond market reached approximately $65.6 billion as of June 30, 2026, while issuance totaled nearly $18 billion during the first half of the year.

In Asia-Pacific, insurance covered roughly 9% of disaster losses in 2023, leaving a 91% gap, with about $6 billion covered.

A catastrophe bond issued in May 2026 provided Jamaica with $200 million in hurricane coverage. It replaced $150 million of coverage that paid out fully after Hurricane Melissa in 2025.

“Jamaica is incredibly grateful to the World Bank for its market guidance and placement of the catastrophe bond across a wide cross-section of global investors,” Fayval Williams, Jamaica’s minister of finance and the public service, said.

Catastrophe-bond payouts are based on pre-agreed conditions, such as a storm’s location and intensity, allowing sponsors to receive financing quickly after a qualifying event.

Henry Tucker, Harneys Bermuda managing partner, said Bermuda’s legal and regulatory framework has supported the growth of insurance-linked securities for three decades.

“For three decades, Bermuda’s proven legal and regulatory framework has been the foundation of its role as a global leader in the continued growth of ILS,” Tucker said.

Harneys and droppRWA said smaller ownership units could broaden market access. The proposal does not set a final minimum investment, distribution method or investor-eligibility requirements. The bond’s size, covered perils, trigger design, pricing and launch date also remain unsettled.