TEN days before the start of the 2026 Atlantic Hurricane Season, Jamaica has strengthened its financial protection against major hurricanes by securing roughly $31 billion (US$200 million) in new coverage from global capital markets after Hurricane Melissa unleashed destruction equivalent to more than half of the country’s economic output last year.

The Government has secured US$200 million in new hurricane coverage, replacing a previous US$150-million catastrophe bond and highlighting the growing financial risks severe storms pose to the island’s economy and recovery efforts.

The World Bank said Monday that strong investor demand allowed the transaction to be expanded to US$200 million as Jamaica seeks greater protection against low-frequency but high-impact hurricanes ahead of what forecasters expect to be another active Atlantic season.

The transaction follows the activation of Jamaica’s previous three-year catastrophe bond after Hurricane Melissa struck the island in October 2025. The storm met pre-agreed trigger conditions tied to its path and intensity, resulting in a full payout to the Government and providing rapid access to emergency financing during the recovery period.

The payout after Melissa effectively tested Jamaica’s disaster financing strategy in real time, giving the Government rapid access to emergency funding after the hurricane met the bond’s trigger conditions.

Hurricane Melissa ultimately generated an estimated US$12.2 billion in damage, losses, and additional costs — equivalent to roughly 56.7 per cent of Jamaica’s GDP — according to post-disaster assessments conducted after the storm, highlighting the scale of the fiscal and economic risks severe hurricanes now pose to the island.

The expanded catastrophe bond also reflects how climate-related disasters are increasingly becoming sovereign balance-sheet risks for vulnerable Caribbean economies like Jamaica. The storm damaged infrastructure, tourism properties, agriculture, and public utilities, triggering a massive reconstruction and recovery effort that continues to strain resources months later.

“Having disaster risk financing in place is a key pillar of our resilience-building framework,” Finance Minister Fayval Williams said in a statement issued by the World Bank. “The catastrophe bond is an important piece ensuring capital market access for Jamaica.”

The new bond forms part of what the World Bank described as Jamaica’s “multi-layered disaster risk financing strategy”, which combines catastrophe insurance with budget reserves, contingent financing arrangements and other forms of coverage aimed at limiting the fiscal shock caused by major hurricanes.

The World Bank noted that Jamaica remains “highly exposed to the financial consequences caused by hurricanes”, warning that severe storms can have major implications for lives, livelihoods, and economic stability.

The catastrophe bond was issued through the World Bank’s “capital at risk” notes programme, which allows countries to transfer disaster-related risks to international capital markets. Under the structure, investors receive returns if no qualifying disaster occurs, but risk losing part or all of their principal if a major hurricane triggers a payout.

The latest transaction will provide Jamaica with coverage through 2030 and carries a risk margin of 6.75 per cent per annum.

World Bank Vice-President and Treasurer Jorge Familiar said the Melissa payout demonstrated how parametric disaster financing instruments can provide quick and reliable financial protection after major disasters.

“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,” Familiar said.

The catastrophe bond will be listed on the Singapore Exchange and was structured by Aon Securities and Swiss Re Capital Markets.

FAYVAL…Having disaster risk financing in place is a key pillar of our resilience-building framework.