The World Bank announced on Friday that the Government of Jamaica will receive a full payout of $150 million under its catastrophe insurance coverage, supported by a catastrophe bond issued in 2024 by the World Bank’s International Bank for Reconstruction and Development (IBRD).
The payout follows Hurricane Melissa’s landfall in Jamaica, with a third-party calculation agent, AIR Worldwide, confirming that the storm met pre-agreed parametric triggers required for a full redemption of the World Bank Catastrophe Bond. The assessment considered the storm’s central pressure and trajectory, as reported by the National Hurricane Center.
Jamaica first obtained insurance protection against named storm events from the World Bank through a catastrophe bond issued in 2021, renewing its coverage three years later with the 2024 bond. The $150 million catastrophe bond, issued for a term of 3.67 years, provides coverage specifically for Jamaica Named Storms.
Jorge Familiar, World Bank Vice President and Treasurer, stated: “The payout underscores the role of catastrophe bonds in effective risk management and their efficiency in transferring disaster risks to capital markets.”
Analysts had speculated shortly after Melissa’s landfall that the bond would be triggered, highlighting the importance of parametric insurance instruments in mitigating the financial impacts of natural disasters.
Catastrophe insurance supported by catastrophe bonds forms part of the World Bank’s Crisis Preparedness and Response toolkit, designed to equip developing nations with financial mechanisms to respond to crises and prepare for future shocks.