Swiss Re said to be in talks with Indian government about catastrophe bond cover

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Livemint.com, an Indian based financial and business news website, is reporting that Swiss Re has been in talks with the Indian Central and state governments to propose methods to minimise risks to the countries finances and population from natural catastrophes.

Two Swiss Re officials are said to have discussed the possibility of catastrophe bonds being issued to provide the Indian government with protection and a financial backstop against major catastrophes. A similar approach to the Mexican earthquake cat bond MultiCat Mexico is suggested in the article.

It would be very interesting for the insurance-linked securities market if Swiss Re’s ideas were adopted by the Indian government. Any issuance of catastrophe bonds linked to Indian risks would be very attractive to the investment community and it would be a first for cat bonds as the only Asian bonds issued to date all focus on Japan.

With microinsurance and index-based weather insurance penetration in India growing rapidly it would also seem likely that we may see Indian insurance companies attempting to tap the capital markets to hedge their growing exposure in the future too.

Read the full article here.

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