World bank organization renewed jamicas coverage for insurance against a catastrophic hurricane event.
In April of 2024.
See responding article here.
World Bank Catastrophe Bond Renews $150
million Hurricane Coverage for Jamaica
In April 2024, the World Bank issued a
catastrophe (cat) bond that provides the
Government of Jamaica with $150
million financial protection for four
hurricane seasons. The cat bond renews
the cover that expired in 2023.
Background
Jamaica is the world’s third most exposed
country to natural disasters. Its location on the
Atlantic Hurricane Belt and its low-lying coastal
zones, which are home to over 80% of the
population, make it especially vulnerable to
hurricanes.
1 Hurricane Dean made landfall on
Jamaica in 2007 and caused estimated
economic losses of $329 million.
2
Jamaica has a well-developed disaster risk
financing strategy. It manages its exposure to
hurricanes and earthquakes through a
combination of budgetary resources, pre-
arranged credits, insurance from the
Caribbean Risk Insurance Facility and a cat
bond issued by the World Bank. The cat bond
provides additional financial protection for
extreme hurricane events.
In March 2021, the World Bank issued a donor
funded cat bond that provided Jamaica with
$185 million of financial protection for three
hurricane seasons. Donors recognized
Jamaica’s strong fiscal management including
preparing for the economic impact of
disasters.
Financial and Project Objectives
Jamaica aimed to extend the cat bond
coverage for four hurricane seasons to
1
https://ieg.worldbankgroup.org/sites/default/files/Data/reports/ppar_jamaic
ahurricanedean.pdf
maintain the resilience of Jamaica’s public
finances. Moreover, Jamaica sought to
optimize the trigger structure to focus payouts
on severe hurricane events.
Financial Solution
The World Bank issued a $150 million cat bond
and simultaneously entered into a risk transfer
agreement with the Government of Jamaica.
Jamaica pays a premium for the coverage
reflecting the terms the World Bank achieved
on the cat bond.
The World Bank will provide payouts to
Jamaica based on the path and intensity of
named storms that cross the boxes covering
the island. Each box is associated with a
threshold for the central pressure of named
storms intersecting the box. Stronger storms
have lower central pressures, and the
maximum pressures for a minimum payout is
illustrated below. The size of a payout is...
Their are 2.84-2.80m Jamaican citizens.
This converted to Jamaican dollars gives a 8,500 per person stimulus to rebuild Jamaican economy and infrastructure....
50 American is about 10,000 in their money....
This will help with the catastrophic natural event facing island....
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