The Government of Jamaica will receive a full payout of $150 million under its catastrophe insurance coverage, backed by a World Bank catastrophe bond, following the devastating impact of Hurricane Melissa.
As one of the most exposed countries to natural disasters, Jamaica has a well-developed disaster risk financing strategy.
This parametric bond, issued in 2021 and renewed in 2024 by the World Bank’s International Bank for Reconstruction and Development (IBRD, AAA/Aaa), offers the country financial protection against specified natural disasters.
It was triggered following a third-party analysis by AIR Worldwide Corporation, which determined that the hurricane’s intensity – based on its central pressure and path – met the pre-agreed conditions for a full redemption.
Catastrophe bonds transfer financial risks from natural disasters to global capital markets and are one of many financial instruments available to support countries in the aftermath of natural disasters such as hurricanes and earthquakes.
They are recognised by credit rating agencies as beneficial to countries and form part of their disaster risk management toolkit.
The immediate infusion of funds will provide crucial financial support as the nation shifts from emergency relief to long-term reconstruction efforts in the wake of the storm.
Jorge Familiar, World Bank Vice President and Treasurer, stated: “Our thoughts are with the people of Jamaica as they recover and rebuild from this tragedy.
“Jamaica’s comprehensive disaster risk management strategy and proactive approach serve as a model for countries facing similar threats and seeking to strengthen their financial resilience to natural disasters. The payout underscores the role of catastrophe bonds in effective risk management strategies and their efficiency in transferring disaster risks to capital markets.”
For further details on the IBRD CAR Jamaica 2024 cat bond and other transactions, please visit our sister publication, Artemis.
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