The World bank has confirmed that following Hurricane Melissa, Jamaica will receive a full payout of US$150 million under its catastrophe insurance coverage with the entity.

The World Bank made the disclosure in a press release this morning.

It said the insurance coverage is backed by a catastrophe bond issued in 2024 by the World Bank.

The announcement comes after Prime Minister Dr. Andrew Holness revealed on Tuesday that infrastructure damage from Hurricane Melissa is estimated at between US$6 and US$7 billion.

The World Bank said analysis carried out by a 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. 

The analysis was based on the storm’s central pressure and path, as reported by the National Hurricane Center.

It said as one of the most exposed countries to natural disasters, 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. 

World Bank Vice President and Treasurer Jorge Familiar said “the payout underscores the role of catastrophe bonds in effective risk management strategies and their efficiency in transferring disaster risks to capital markets.”

In addition to the forthcoming full payout of the catastrophe bond, a broad package of World Bank Group assistance is ready to be mobilized to support Jamaica, combining quick-disbursing emergency finance, the redeployment of existing project funds and targeted private-sector support.