In the weekly Impact Forecasting report from Aon, the company said that major hurricane Melissa’s impacts on Jamaica are likely to drive economic and insured losses into the single-digit billions of dollars, while also confirming parametric structures are likely to respond due to the storms severity.
The insurance and reinsurance broker explained that, for Jamaica, there will be a range of financial instruments that respond, from the government’s own prudent reserves, to contingent capital and the World Bank and IBRD issued catastrophe bond.
“Under the bond terms, a 100% payout of $150 million is triggered for a hurricane near or directly over Jamaica with a minimum central pressure at or below 900 mb. Given that Melissa achieved a preliminary 892 mb central pressure at landfall, it is likely that the full payout will be triggered, subject to an independent review,” Aon’s report explained.
While adding on other parametric insurance, “Additional payouts are possible due to the country’s relationship with the Caribbean Risk Insurance Facility (CCRIF SPC), which features excess rainfall and wind parametric triggers.”
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