Jamaica’s Disaster Plan Faces Its Biggest Challenge Yet: Hurricane Melissa

For over a decade, Jamaica has been diligently working on creating a financial safety net in the event of Jamaica disaster plan. As Hurricane Melissa tears through the island nation, leaving a trail of destruction in its wake, Jamaica’s investment in financial resilience is set to pay off in a very literal way. Jamaica’s fiscal readiness could set a precedent for other climate-vulnerable nations around the globe.

Caribbean hurricane on Jamaica’s $150 million U.S. catastrophe bond, or “cat bond,” will be met when a major hurricane strikes and should soon result in a payout based on the storm’s strength and path.

“The cat bond is linked to the minimum pressure of the hurricane at landfall,” Florian Steiger, CEO of Icosa Investments, a Swiss-based investment management firm focused on catastrophe bonds, told Rest of World. “A third-party verifies that the event has met the trigger condition—and in this case, it’s obvious that it has.”

A Multilayered Disaster Preparedness Strategy

The catastrophe bond is just one element of Jamaica’s overall disaster risk financing natural disaster strategy, which offers a multilayered financial safety net in case of natural disasters.

“I think Jamaica has one of the most comprehensive packages right now,” Conor Meenan, a risk financing adviser at the U.K.-based Centre for Disaster Protection, told Rest of World.

How Jamaica’s Cat Bond Works

Jamaica’s $150 million U.S. catastrophe bond was issued in 2024 with the World Bank’s support. The government issued the bond and paid it out of its emergency funds, while the investors who purchased the bond are mostly institutional investors from North America and Europe.

Jamaica previously issued a catastrophe bond in 2021. Called the Caribbean Catastrophe Risk Deferred Savings Cat Bond, it provided Jamaica with $185 million U.S. in disaster risk coverage, which was funded mostly by international donors.