Pandemic Bonds and Stochastic Logistic Growth Model

Pandemic bonds can be used as an effective tool to mitigate economic losses governments confronts during pandemic and transfer it to global capital market. Once considered ``uninsurable," pandemic bonds came to world attention with the World Bank pandemic bonds issuance in 2017. Compared to other CAT bonds, pandemic bonds received less attention from actuaries, industry professionals and academic researchers. Existing research mostly focused on how to bring epidemiological parameters to the pricing mechanism through compartmental models. In this research, we introduce stochastic logistic growth model based pandemic bond pricing framework. We demonstrate proposed model by calibrating it using COVID-19 data and pricing zero coupon bond. The model can be used as an alternative to epidemic compartmental model based pandemic bond pricing mechanisms