KINGSTON, Jamaica— In the wake of the devastation to sections of Jamaica by Hurricane Melissa, the island is set to receive a full payout of US$150 million under its catastrophe insurance coverage with the World Bank backed by a catastrophe bond issued in 2024 by the World Bank (International Bank for Reconstruction and Development, or IBRD, AAA/Aaa).

“Our thoughts are with the people of Jamaica as they recover and rebuild from this tragedy. Jamaica’s comprehensive disaster risk management strategy and proactive approach serve as a model for countries facing similar threats and seeking to strengthen their financial resilience to natural disasters,” said Jorge Familiar, World Bank vice president and treasurer in a media release on Friday. “The payout underscores the role of catastrophe bonds in effective risk management strategies and their efficiency in transferring disaster risks to capital markets.”

The World Bank said in addition to the forthcoming full payout of the catastrophe bond, a broad package of World Bank Group assistance is ready to be mobilised to support Jamaica — combining quick-disbursing emergency finance, the redeployment of existing project funds, and targeted private-sector support through the International Finance Corporation, the World Bank Group’s private sector development arm.

“Jamaica’s strong commitment to preparedness is now paying off — enabling the country to move swiftly from recovery to reconstruction and use this moment not just to rebuild, but to leapfrog toward more resilient infrastructure”, said Susana Cordeiro Guerra, World Bank vice president for Latin America and the Caribbean.

“As Jamaica takes on this next phase, the World Bank Group stands with the Government and people to help rebuild stronger, restore livelihoods, and set a new benchmark for resilience across the Caribbean,” she said.

World Bank said analysis carried out by 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.

As one of the most exposed countries to natural disasters, the World Bank said 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. Catastrophe bonds are recognised by credit rating agencies as beneficial to countries and form part of their disaster risk management toolkit.