INSIGHTS: FINANCIAL PROTECTION

Investors were spared any loss of principal due to the specific trigger terms of the CAT bond, while the Government of Jamaica must now draw on resources from its self-funded Contingency Fund and Natural Disaster Fund to help finance the emergency response and recovery spending in the aftermath of Hurricane Beryl. [...] Jamaica is fortunate that Hurricane Beryl did not make landfall and that the trajectory of the centre of the hurricane passed far away from the capital city of Kingston. [...] However, the disappointing payout outcome of Jamaica's CAT bond underscores the need for the World Bank to reassess the usefulness of this complex and costly financial instrument and even perhaps for Jamaica to renegotiate the terms of its CAT bond to better serve its natural disaster financing strategy. [...] EARLY OPERATIONALIZATION OF THE FUND FOR RESPONDING TO LOSS AND DAMAGE The passage of Hurricane Beryl throughout Jamaica and the rest of the Caribbean reinforces the need for the newly created 'Fund for Responding to Loss and Damage' to shift into operational gear to provide concessional financial support to affected countries in the aftermath of these kinds of climate disasters. [...] INSIGHTS: FINANCIAL PROTECTION 05 WORLD BANK SHOULD COURSECORRECT FOR MORE FLEXIBLE CAT BOND TRIGGER CONDITIONS IN THE WAKE OF JAMAICA’S EXPERIENCE WITH HURRICANE BERYL ABOUT THE AUTHORS Sara Jane Ahmed is the Managing Director and Finance Advisor to the Vulnerable Group of Twenty (V20) Ministers of Finance of the Climate Vulnerable Forum (CVF).