Beyond reinsurance policies issued by companies, some primary insurers have turned to the capital markets for innovative financing models—like catastrophe bonds. Catastrophe bonds are high-yield securities that insurance companies use to raise funds that can be paid out if a major disaster occurs. Investors buy these bonds, and if they reach their maturity date and no major disasters have occurred, the investor’s principal is returned. There’s also the benefit of regular interest payments, which can be higher than what you might see with lower-yielding debt instruments due to the risk of a natural disaster.