The whole world is facing increasing frequency and severity of catastrophe events. Some of them, like the US hurricanes Katrina, Rita and Wilma are caused by nature fury and an incident like 9/11 is man-made. India has also experienced catastrophe due to flood in 2005 in Mumbai and again in 2006 in Gujarat. Managing Cat events poses challenges not only to the government but also to the insurance industry. This article examines some aspects of catastropheits meaning and implication.

Catastrophe (CAT) in the insurance parlance refers to the possibility of exposure to an accumulation of losses from one event. In other words, a single event causing loss to more than one risk at the same time is normally referred to as a catastrophic event. It can be a natural event, like, earthquake, flood, volcanic eruption, wild fire, hurricane, landslide, pandemic and winter storm or can be a man-made event like the one that affected the twin towers at New York on 9/11, industrial contamination and technological failure.

An event causing a number of individual losses due to operation of a natural peril like earthquake or flood can be termed as "natural catastrophe". The losses due to floods, earthquake, storms, cold waves are some of the examples of natural events having the potential to cause losses of catastrophic nature. On the other hand, an event associated with human activities is normally categorized under "man-made" disaster. Events like major fire, explosions, and aviation and mining disaster are some of the examples of "man-made" events. They are otherwise termed as "technical" disasters.

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