The market for insurance-linked securities (ILSs) continues to grow, with a record amount in catastrophe bonds on risk in the year to June 30.

More than $US50 billion ($56 billion) of capital has flowed into the catastrophe bond market since 1996, and investors continue to pour in funds, according to Aon Benfield’s sixth annual ILS report.

The extra capital is dropping the cost below traditional reinsurance markets.

Last year $US6.7 billion ($7.52 billion) of bonds were issued, below the 2007 figure for new issues. But total bonds on risk reached a record high of $US17.5 billion ($19.64 billion), surpassing the $US16.2 billion mark set in 2008.

“The new record level of catastrophe bonds on risk highlights the recent expansion of the ILS market,” the report says. “An increasing number of bonds will mature over the next two years due to the increase in issuance following the global financial crisis.”

Aon Benfield expects the expansion to continue, with new issues outweighing maturities.

It says ILS investors are in the market for the long term and will keep backing the securities even if interest rates improve on traditional investments.

No catastrophe bond paid out for losses during the year, including on the devastating Superstorm Sandy.