World Bank says Jamaica will get full payout of US$150 million catastrophe bond

 

The World Bank has confirmed that the Government of Jamaica will receive a full payout of US$150 million under its catastrophe insurance coverage.

 

The government announced last week that the catastrophe bond had been triggered following the devastation caused by Hurricane Melissa.

 

In a statement on its website on Friday, the World Bank confirmed that the 100 per cent payout would be made to aid in the reconstruction exercise on the island.

 

It said, an analysis carried out by third-party calculation agent AIR Worldwide Corporation, concluded that Hurricane Melissa reached pre-agreed parametric triggers, qualifying for a full redemption of the World Bank catastrophe bond, which offers Jamaica financial protection against specified natural disasters.

 

As one of the most exposed countries to natural disasters, the World Bank said Jamaica has a well-developed disaster risk financing strategy.

 

Jamaica initially received insurance coverage against named storm events from the World Bank through a World Bank-issued catastrophe bond in 2021, and three years later, renewed its coverage with the 2024 catastrophe bond.

 

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.

 

Catastrophe bonds are recognised by credit rating agencies as beneficial to countries and form part of their disaster risk management toolkit.

 

World Bank Vice President for Latin America and the Caribbean, Susana Guerra, said 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 forward more resilient infrastructure.

 

She added that 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. 

 

Catastrophe insurance backed by catastrophe bonds are part of the World Bank's crisis preparedness and response toolkit which provides developing countries with an innovative suite of tools to better respond to crises and repair for future shocks. 

 

This includes fast access to cash for emergency response, expanded catastrophe insurance and the option to pause debt service payments in the aftermath of a natural disaster.