Last year about $7bn of catastrophe bonds were issued, with little growth expected for 2008

"We expect growth to be more gradual, unless or until there are additional events," said Michael Millette, head of structured finance at Goldman Sachs, as quoted by Reuters.

Catastrophe bonds have thrived in recent years, but a number of factors are seen as cooling their growth in 2008. Excess reinsurance capacity makes it cheaper for insurers to avail themselves of traditional markets. With few costly disasters since 2005, reinsurers have lowered pricing to try to increase business.

Cat bonds remain only a fraction of traditional reinsurance, but experts expect growth to surge when disasters create disruption. And there is much room to grow -- about 8 percent of global catastrophe limits are covered by cat bonds, according to Standard & Poor's.