Jamaica’s innovative disaster financing through a US$150 million catastrophe bond has provided crucial lessons for the Cayman Islands’ own hurricane preparedness.
That’s according to Premier Andre Ebanks who spoke on the issue during a meeting of the Parliament of the Cayman Islands on Thursday, 6 November.
Ebanks praised Jamaica’s foresight in securing parametric insurance coverage through a World Bank-facilitated catastrophe bond announced in April last year.
“It is precisely the kind of preparation that will enable Jamaica to rebuild stronger than before,” the premier said of Hurricane Melissa, which devastated western Jamaica.
He commended Jamaican prime minister Andrew Holness and former finance minister Dr Nigel Clarke for building layers of financial resiliency.
The catastrophe bond, a financial instrument designed to deliver rapid, transparent relief when disasters strike, automatically triggers payouts when specific conditions are met, avoiding lengthy claims processes that can delay recovery efforts.
Ebanks warned that Hurricane Melissa could have easily tracked west and struck the Cayman Islands with similar devastation, calling the near-miss a “clarion call” for improved disaster preparedness.
“Like Jamaica, the Cayman Islands must develop and maintain layers of risk protection, comprehensive insurance mechanisms, emergency response systems and innovative financial tools like catastrophe bonds,” he said.
The premier confirmed Cayman has committed US$1.2 million in relief supplies to Jamaica.
This follows an initial $200,000 delivery on 30 October when Cayman Airways was the first international carrier to land at Norman Manley International Airport after the hurricane.
Ebanks, who led a delegation including ministers Jay Ebanks and Nickolas DaCosta, and opposition leader Joey Hew, said the government would study disaster preparedness examples from across the region.
“We cannot afford complacency. Heaven forbid, if a disaster day comes, we must be ready to respond, to recover and to rebuild swiftly,” he said.
The premier noted that Dr Clark, who championed Jamaica’s catastrophe bond while finance minister, now serves as deputy managing director of the International Monetary Fund, calling him “a wonderful example of the heights Caribbean people can achieve”.
Catastrophe bonds, also known as cat bonds, allow governments to transfer disaster risk to capital markets.
Investors receive regular premium payments but forfeit their principal if a qualifying disaster occurs, with funds then released immediately to the affected country.
The Caribbean region has increasingly turned to such instruments as traditional insurance becomes more expensive and restrictive following major hurricanes.
Similar bonds have been issued by Mexico, the Philippines and other disaster-prone nations.
Ebanks said the Cayman Islands Government would continue advocating at international forums for increased climate resiliency support for small island developing states facing disproportionate risks from global warming.
“In the Caribbean region we are small islands but we are large in spirit, larger still in compassion, gigantic in our commitment to one another,” the premier said.
The government will engage with regional partners including CARICOM and the Caribbean Disaster Emergency Management Agency to ensure coordinated assistance throughout Jamaica’s recovery, which Ebanks said would be “measured not in days or weeks, but in months and years”.
