Hurricane Melissa set to trigger $150 million Jamaica catastrophe bond to help rebuild

Core Insights - Hurricane Melissa, a Category 5 storm, made landfall in Jamaica, likely triggering a full payout from a $150 million catastrophe bond designed for the island [1][2][3] Group 1: Catastrophe Bond Details - The catastrophe bond, structured by Aon, provides parametric coverage for Jamaica against losses from named storms, effective through 2027 [2] - Jamaica is the first Caribbean government and the first small island state to independently sponsor a catastrophe bond, showcasing the value of private market funding [3] - The bond's payout is contingent on the storm's central pressure being at or below 900 millibars upon landfall [3][4] Group 2: Payout Process and Timeline - Early data indicates Hurricane Melissa's pressure remained below 900 millibars in several areas, with verification ongoing [4] - The review process for payouts typically takes 2 to 3 weeks, with potential payouts to Jamaica occurring in approximately 1 month [5] - Aon utilized innovative data sources to facilitate faster payments for this event compared to previous transactions [5] Group 3: Market Context and Growth - The catastrophe bond market has grown over 50% since the end of 2022, reaching nearly $55 billion, indicating increasing popularity of such financial instruments [8] - Public-private partnerships, like Jamaica's, demonstrate how parametric insurance can provide rapid and transparent relief after severe storms [8]