Jamaica’s finance minister, Nigel Clark, told Reuters his country intends to renew its catastrophe bond coverage when it matures at the end of this year, and will do so either as a stand-alone catastrophe bond for Jamaica or as a Caribbean one if others want to participate.
As we have previously reported, Jamaica has been promoting its experience as a cat bond originator and hopes to encourage other countries in the region to join it in launching Caribbean cat bonds to cover multiple countries.
Caribbean countries have been discussing this possibility with the World Bank for some time, and multi-country catastrophe bonds in the region are seen as an effective way to access disaster risk financing and insurance capacity from capital markets.
Jamaica, which secured its own catastrophe bond in 2021 with the help of the World Bank, has been discussing the potential benefits of this opportunity with other Caribbean countries.
But a Reuters report suggested that Jamaica’s catastrophe bonds are set to mature at the end of 2023, with its finance minister promising to renew them.
“Jamaica will definitely reissue our bonds, even if we don’t have anyone else going with us,” Nigel Clarke explained.
He has been discussing the possibility of launching a regional catastrophe bond for the Caribbean with countries including the Bahamas and Barbados, and said he has received “clear interest”.
The idea is to protect Caribbean national budgets from hurricane risk by issuing catastrophe bonds covering the region or some of its islands, while diversifying the risk to capital markets with the help of institutional investor capital.
“Interest has been indicated and we will go from there,” Clark told Reuters.
As for Jamaica’s catastrophe bond, Clark said, “it provides the financial protection we need to withstand the effects of climate change and natural disasters.”
Joining with other Caribbean countries can help spread investor risk and reduce issuance costs, Clark said.
World Bank President Ajay Banga also told Reuters that he supports catastrophe bonds, saying, “These bonds allow you to plan ahead. Why wait until the catastrophe is imminent? Why don’t we give you peace of mind because it’s for you.” It exists?”
Banga praised Jamaica for using catastrophe bonds as a form of disaster insurance protection.
We first reported that Jamaica’s catastrophe bond could be expanded to cover more countries in 2022. It is encouraging to hear that people continue to work hard to gain support for this, and that Jamaica will plan to update important protections on its own.