World Business Report Jamaica to get $150 million from “catastrophe” bond
Nov 7, 2025
Jorge Familiar, the World Bank's vice-president and treasurer, discusses Jamaica's $150 million catastrophe bond payout after Hurricane Melissa. He explains how catastrophe bonds work, transferring disaster risk from countries to investors, and emphasizes the growing role of financial markets in disaster relief. Familiar also addresses concerns about the limits of the payout versus broader damage, and highlights the necessity for prepared financial safety nets amidst climate risk financing challenges.
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Cat Bonds Transfer Risk To Markets
- Catastrophe bonds shift disaster risk from governments to private investors by paying out when pre-agreed triggers are met.
- They form a top layer in a multi-tiered financial safety net for countries like Jamaica.
Investors Are Not Donors
- Investors buy catastrophe bonds for diversification and attractive returns, not as donors.
- Countries pay a premium to hedge disaster risk using market-based instruments.
Payouts Are Partial But Strategic
- A $150m payout helps but sits against estimated damages of $6–7bn, so it's one part of recovery financing.
- Well-prepared countries combine reserves, credit lines and market instruments to manage large shocks.