World Bank Lifts Jamaica Hurricane Catastrophe Bond Coverage To US$200 Million

Jamaica will enter the 2026 Atlantic hurricane season with US$200 million in hurricane-related financial protection from the World Bank, following last year’s Hurricane Melissa, which left an estimated US$8.8 billion in damage across the island.

The World Bank said Monday that strong interest from investors allowed the final coverage to be set above the original target. The new facility succeeds a US$150 million catastrophe bond, which was fully triggered after Hurricane Melissa satisfied previously agreed criteria based on the storm’s intensity and track.

Catastrophe bonds, also known as “cat bonds,” are financial instruments that help governments receive money quickly after severe natural disasters. Investors purchase the securities and earn returns unless a covered event takes place. When the specified disaster conditions are met, the proceeds are made available to the country affected.

The latest bond gives Jamaica hurricane coverage for a three-year period. The World Bank said the country continues to face high exposure to storms and the financial fallout that can follow, including losses affecting public infrastructure, household incomes and the Government’s fiscal position.

Officials said the bond is one part of Jamaica’s wider disaster readiness framework, which also includes emergency reserves, insurance arrangements and contingency funding.

“Having disaster risk financing in place is a key pillar of our resilience building framework. We thank our partner, the World Bank, for its continued support. The catastrophe bond is an important piece ensuring capital market access for Jamaica,” said Fayval Williams, Jamaica’s minister of finance and the public service.

Jorge Familiar, vice president and treasurer of the World Bank Group, said the disbursement after Hurricane Melissa highlighted why countries need disaster financing that can be accessed without delay.

“We are proud to continue supporting Jamaica in accessing capital markets through the World Bank to strengthen its resilience against hurricane risk,” Familiar said. “The payout following Hurricane Melissa demonstrated once again how countries can prepare for disaster with well-designed parametric instruments that deliver fast, and reliable financial protection when it is needed most.”

According to the World Bank, the financing was issued under its “capital at risk” notes programme, a mechanism that enables member countries to shift some natural disaster exposure to international capital markets.

Susana Cordeiro Guerra said Jamaica’s recent encounters with major hurricanes show why advance financial planning remains essential.

“Jamaica’s commitment to building resilience and protecting livelihoods through hurricane insurance coverage is commendable. Having faced two significant hurricanes in the past two years, financial preparedness remains critical, and the World Bank will continue supporting Jamaica as it plans and builds forward,” Guerra said.

Aon Securities and Swiss Re Capital Markets arranged the transaction. Moody’s supplied the risk modelling services for the bond.

“Moody’s is privileged to work with the World Bank on this latest bond issuance, which plays an important role in strengthening the Government of Jamaica’s mission to build financial resilience to natural disasters. Catastrophe bonds are increasingly important in providing timely access to funding following severe events, and it is important that they are underpinned by robust risk quantification,” said Michael Steel, general manager of Moody’s Insurance Solutions.