Planet Money How hurricanes became a hot investment
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Dec 5, 2025 
Karen Clark, a pioneer in catastrophe risk modeling, shares her insights on how Jamaica started betting on hurricane risks via catastrophe bonds. She explains how these bonds allow investors to share the costs of disasters while helping governments rebuild. Clark discusses the evolution of disaster modeling, her experiences presenting predictions to Lloyd's after Hurricane Andrew, and the market's shift towards securities for insurance. The conversation highlights the impact of climate risks and innovation in financing recovery efforts.
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Seeing Destruction Firsthand
- Favol (Fayval) Williams visited hurricane-devastated communities and saw entire houses gone and people stunned and uncertain.
- She comforted residents and reassured them the government would take steps to help rebuild.
Cat Bonds Shift Risk To Global Investors
- Catastrophe bonds let investors, not just insurers, absorb disaster risk by paying high interest in exchange for potential principal loss.
- Karen Clark's modeling made those risks measurable and investable for global markets.
From Skepticism To Validation
- Karen Clark recalled presenting her early hurricane model to skeptical Lloyd's of London execs while seven months pregnant.
- Her model predicted much higher losses than the industry expected, but later proved accurate after Hurricane Andrew.