Waylon Wong

At the same time, more and more insurance companies are turning to cat bonds to solve one of their big problems right now, which is climate change.

The research says that hurricanes are getting more intense.

Wildfires are becoming more frequent.

In high-risk places like California and Florida, a lot of insurance companies are pulling out.

They're like, this is too much risk for us.

And so investors like Ethan are helping citizens provide insurance to people living in risky areas.

Ethan's firm owns some of those cat bonds from citizens.

The latest ones pay investors between 8 and 13 percent interest.

And he knows that if a big hurricane hits Florida, he's going to lose his investment.

And he kind of likes that part.

After the break, we talked to someone who tried to take the idea one step further.

He thought, what if cat bonds could help people suffering from Ebola?

And we're starting to see more and more unusual types of risk getting packaged and put onto the market, like cat bonds for terrorism risk or cyber attacks.

And about 10 years ago, the largest Ebola outbreak in history occurred in West Africa.

More than 10,000 people died.

Michael and his colleagues were sitting in that not-so-cushy office in D.C.

thinking, what we really need is some kind of international pandemic insurance so that poorer countries could get some help.

Okay, so of course they didn't literally say that, but that's the essence of what a cat bond is.

And the World Bank ended up raising more than $300 million worth of these new pandemic cat bonds.

The World Bank's first ever pandemic bond was set to last for three years, starting in 2017.