The World Bank priced a catastrophe bond to provide the government with financial protection of up to 185 million US dollars against losses from named storms for three Atlantic tropical cyclone seasons ending in December 2023.

The World Bank says the Jamaican government is the first in the Caribbean, and the first of any small island state, to independently sponsor a catastrophe bond.

The World Bank says Jamaica was one of the sixteen countries in the Caribbean catastrophe risk insurance facility that benefited from the International Bank for Reconstruction and Development, IBRD’s first ever cat bond in 2014.

The bonds were issued under IBRD’s “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.

The world bank says pay outs to Jamaica will be triggered when a named storm event, meets the parametric criteria for location and severity set forth in the bond terms.

The transaction includes an innovative reporting feature resulting in a quick payout calculation, within weeks of a qualifying named storm.

The World Bank, says it’s pleased to be able to support this transaction and bring together so many different partners all committed to strengthening Jamaica’s resilience to tropical cyclones.

For his part, Minister of Finance Dr. Nigel Clarke, says the government is pleased with the successful placement of this catastrophe bond, which adds an indispensable layer of disaster risk financing that complements Jamaica’s multi-layered approach.