The Government of Jamaica is set to receive a $150 million payout after Hurricane Melissa triggered the full activation of its catastrophe insurance coverage with the World Bank. The payout follows the determination by AIR Worldwide Corporation, a third-party calculation agent, that the storm met pre-agreed parametric triggers based on its central pressure and path as reported by the National Hurricane Center.
Jamaica has been recognized as one of the countries most vulnerable to natural disasters. In response, it developed a disaster risk financing strategy that includes catastrophe bonds. The country first obtained insurance coverage for named storms through a World Bank-issued catastrophe bond in 2021 and renewed this coverage with another bond in 2024.
Catastrophe bonds are financial instruments that shift disaster-related risks from countries to global capital markets. Credit rating agencies acknowledge these bonds as beneficial components of national disaster risk management strategies.
Jorge Familiar, World Bank Vice President and Treasurer, commented: “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.”
Beyond the insurance payout, additional support from the World Bank Group will be made available to Jamaica. This assistance package will include emergency finance that can be quickly disbursed, reallocation of existing project funds, and targeted private-sector support through the International Finance Corporation.
Susana Cordeiro Guerra, World Bank Vice President for Latin America and the Caribbean, stated: “As Jamaica confronts the aftermath of Hurricane Melissa, its strong commitment to preparedness is proving its worth — allowing the country to move swiftly from relief to reconstruction and to use this moment not just to rebuild, but to leapfrog toward more resilient infrastructure. The World Bank Group stands with the Government and people of Jamaica to help rebuild stronger, restore livelihoods, and set a new benchmark for resilience across the Caribbean.”
The catastrophe insurance backed by these bonds is part of a broader set of tools offered by the World Bank’s Crisis Preparedness and Response toolkit. This toolkit provides developing countries with mechanisms such as rapid access to emergency funding, expanded insurance options for disasters, and temporary suspension of debt payments following major events.
More information about these programs can be found on the official website.