Jamaica catastrophe bonds (2021 and 2024)
Jamaica's hurricane cover through World Bank catastrophe bonds, renewed in 2024 and paid out in full after Hurricane Melissa in 2025.
A small island economy can lose a considerable share of its output overnight, and it has neither the tax base nor the access to credit to rebuild quickly. Jamaica bought named storm cover in 2021 as a catastrophe bond issued by the World Bank, then renewed it in 2024. The trigger is parametric: the storm's central pressure and track, as published by the U.S. National Hurricane Center, must cross thresholds set in advance within geographic boxes. This mechanism removes damage assessment, but it exposes the state to basis risk, which it has experienced in both directions. The story of these two issues is the clearest illustration of what a parameter pays and does not pay.
In July 2024, Hurricane Beryl skirted Jamaica without its central pressure reaching the threshold in the relevant box: the bond paid nothing. After Hurricane Melissa in late October 2025, the calculation agent AIR Worldwide concluded that pressure and track met the agreed parameters, and the World Bank confirmed a full 150-million-dollar payout to the Jamaican government.
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