Catastrophe bonds were originally incented by the Northridge Earthquake in California and Hurricane Andrew in Florida, and cat bonds are commonly applied to earthquakes, hurricanes, floods, and wildfires. See also What’s a Cat Bond?
Regarding the particular tsunami of last week, it appears that insurers usually exclude tsunamis from flood coverage, considering them more like earthquakes. Insurers don’t seem very worried about excess claims, possibly because of exclusions like the above, and also because the insurers are often covered by catastrophe reinsurance.
Of course, this also means that many of the people affected by the tsunami probably weren’t insured.
2004 was the most expensive in modern history for natural disasters, with $105 billion in property damage and $42 billion in insurance claims. This leads to some worry as to whether this is a trend, and will insurers be able to deal with it. More on that later.
Meanwhile, a single worst-case Internet worm could cause $50 billion in economic damages in the U.S. alone, and $100 billion worldwide.
-jsq
Phenomenon of Tsunami is going to be universal and may hit any country without any geographical /distance limitation. When the risk of Natural calamity is accepted in one country ,loss due to tsunami is to be paid, since application of premium rate is limited to that country.