Harneys and dropRWA Plan Tokenised Cat Bonds to Close Asia's Disaster Insurance Gap
Key points
- Natural disasters caused $220 billion in economic losses last year, but insurance covered only $107 billion, leaving a $113 billion gap according to Swiss Re.
- The OECD found that 91% of disaster losses in Asia-Pacific in 2023 were uninsured, with limited claims data and weak catastrophe models compounding the coverage shortfall.
- The global cat bond market stood at $65.6 billion outstanding in June, with second-quarter 2026 issuance of $11.3 billion representing the largest quarterly total on record per Artemis.
- Harneys and dropRWA plan to issue tokenised cat bonds in early 2027, with each token carrying legal ownership and a potential structure accommodating smaller beneficial interests than the $250,000-plus minimums typical of conventional offerings.
- The World Bank's $200 million hurricane coverage arrangement for Jamaica in May, replacing a cat bond that paid out after Hurricane Melissa in 2025, demonstrates that tokenised or capital-market disaster instruments can serve sovereign resilience strategies.
Natural disasters generated $220 billion in economic losses last year, yet insurance absorbed only $107 billion of that figure, according to Swiss Re. The shortfall is sharpest in Asia-Pacific, where the Organisation for Economic Co-operation and Development (OECD) found that 91% of disaster losses in 2023 went uninsured, a gap the OECD partly attributes to thin claims data and underdeveloped catastrophe models that make pricing difficult for insurers and reinsurers.
Bermuda law firm Harneys and tokenisation platform dropRWA have announced plans to issue tokenised catastrophe bonds in early 2027, with each token representing legal ownership of the underlying instrument. The conventional cat bond market is large and growing, reaching $65.6 billion outstanding in June and recording $11.3 billion in new issuance during the second quarter, the highest quarterly total on record per Artemis. That market has historically been accessible mainly to specialist funds and large institutions, with many offerings carrying minimum investments of $250,000 or more. Harneys and dropRWA are exploring a structure that could support smaller beneficial interests, though the firms acknowledge that securities, insurance and investor-protection rules still apply.
Henry Tucker, chief executive of specialist insurance group Hearns, framed the instrument as distinct from speculative trading: capital is fully committed to cover a defined insurance risk rather than taking a position against another market participant. Tucker highlighted flood and typhoon risks in Southeast Asia as exposures that are difficult to place with conventional reinsurers when data is limited. The proposal has a real-world reference point: the World Bank arranged $200 million in hurricane coverage for Jamaica in May, a transaction that followed an earlier cat bond that paid out after Hurricane Melissa in 2025. Tucker was explicit that tokenisation will not make disasters cheaper or guarantee lower premiums for households in exposed areas; the argument is that smaller ownership units and an onchain legal record could deepen the investor base available to absorb extreme losses.
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