Following the devastating impact of Hurricane Melissa, the Government of Jamaica will receive a full payout of $150 million under its catastrophe insurance coverage with the World Bank. The insurance is backed by a catastrophe bond issued in 2024 by the International Bank for Reconstruction and Development (IBRD). The third-party calculation agent, AIR Worldwide Corporation, confirmed that the hurricane met the pre-agreed parametric triggers based on its central pressure and path, qualifying Jamaica for a full redemption under the bond’s terms.
Jamaica, one of the countries most exposed to natural disasters, has a comprehensive disaster risk financing strategy. The country first secured catastrophe insurance through a World Bank-issued bond in 2021 and renewed its coverage in 2024. These bonds transfer financial risks from natural disasters to global capital markets, offering an effective mechanism to provide rapid financial relief after catastrophic events. Recognized by credit rating agencies, catastrophe bonds are increasingly becoming key instruments in countries’ disaster risk management frameworks.
World Bank Vice President and Treasurer Jorge Familiar expressed solidarity with the people of Jamaica, emphasizing that the payout highlights the critical role of catastrophe bonds in enhancing financial resilience and transferring risk efficiently. He commended Jamaica’s proactive approach as a model for other disaster-prone nations.
Beyond the catastrophe bond payout, the World Bank Group will mobilize a broader assistance package to support Jamaica’s recovery. This will include quick-disbursing emergency financing, redeployment of existing project funds, and private sector support through the International Finance Corporation (IFC).
World Bank Vice President for Latin America and the Caribbean Susana Cordeiro Guerra noted that Jamaica’s preparedness has enabled a swift transition from relief to reconstruction, with the opportunity to rebuild stronger and create more resilient infrastructure. She reaffirmed the Bank’s commitment to helping Jamaica restore livelihoods and strengthen resilience across the Caribbean.
The catastrophe insurance and bonds are integral to the World Bank’s Crisis Preparedness and Response toolkit, which provides developing countries with innovative tools to manage crises. This includes rapid access to emergency funding, expanded catastrophe insurance, and mechanisms to pause debt service payments following natural disasters—helping nations respond more effectively and recover faster.
