Jamaica secures 150 million USD in storm insurance coverage

The World bank has priced a catastrophe bond that provides 150 million US dollars in insurance coverage for the Government of Jamaica against named storm events over the next four years.

Finance Minister, Dr. Nigel Clarke notes that this is the second consecutive catastrophe bond that Jamaica has sponsored with the assistance and support of the World Bank. 

He says the bond will provide fiscal resources for emergency expenditures that arise from a direct hit by a high intensity storm, during hurricane seasons from 2024 to 2027. 

In a statement, the World Bank notes that this is the renewal of its 2021 catastrophe bond for Jamaica, which was the first small island state to independently sponsor a catastrophe bond.

It explains that Jamaica is exposed to tropical cyclone events that threaten, not only lives and livelihoods, but also the country’s economic outlook, and as such, the bond forms part of a multi-layered disaster risk financing strategy aimed at reducing the fiscal burden of natural disasters while allowing the government to respond swiftly.

The World Bank says the cat bonds were issued under its “Capital At Risk” notes program, which can be used to transfer risks related to natural disasters, and other risks from developing countries, to the capital markets. 

It explains that the bonds’ parametric structure makes funds readily available to finance insurance pay-outs to Jamaica, if a severe tropical cyclone event occurs. 

Pay-outs to Jamaica will be triggered when a named storm event meets the criteria for location and severity, set forth in the bond terms. 

The cat bond attracted 15 global investors, providing the funding for catastrophe insurance to Jamaica, for four hurricane seasons, that is from 2024 to 2027. 

Responding to the pricing of the bonds, Vice President and Treasurer of the World Bank, Jorge Familiar said the institution is proud to have partnered with Jamaica for the second time on a cat bond transaction.

He said over recent years, Jamaica has done a very impressive job with its fiscal consolidation. 

The World Bank’s VP added that, through the comprehensive disaster risk strategy of which this cat bond renewal plays a critical part, Jamaica is proactively protecting its fiscal position against risk, in a manner that could become a model for other countries vulnerable to natural catastrophes. 


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