After Hurricane Melissa devastated Jamaica this week on its way across the Caribbean, expert analysis suggests the island nation is in line for hundreds of millions of dollars in payouts from innovative forms of insurance policies like catastrophe bonds to help it recover.
Jamaica’s finance minister Fayval Williams said in June that the country had disaster financing coverage worth 130.6 billion Jamaican dollars (US$820 million). The country has insurance with the Caribbean Catastrophe Risk Insurance Facility (CCRIF) and a $150-million catastrophe bond, which experts say is likely to pay out in full.
Finance and climate researchers praised the Jamaican government’s foresight in arranging cover, which is likely to bring much-needed and relatively fast funds to help the country cope and rebuild. Sara Ahmed, advisor to the Climate Vulnerable Forum, commended Jamaica for “its leadership in deploying a mix of risk financing tools as climate change intensifies tropical storms and hurricanes”.
The executive director of the UN’s Green Climate Fund (GCF) Mafalda Duarte told Climate Home News on Thursday that, while the GCF currently has limited involvement in insurance, it is exploring more such investments. “A lot more needs to be done in this area,” she said.
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But, while praising Jamaica’s government, other climate and finance analysts warned that the scale of the payouts is unlikely to come close to covering the losses from the hurricane and argued it is an injustice that small-island taxpayers who contributed little to the climate crisis are the ones who pay the insurance premiums – which are now likely to rise after this week’s disaster.
Catastrophe bonds
Catastrophe bonds originated in the US in the 1990s as a way to get investors – rather than insurance companies – to cover the risk of events like hurricanes and earthquakes deemed rare but severe. The World Bank has since promoted their roll-out to developing countries like Jamaica.
Earlier this year, finance minister Williams told Bloomberg: “We are situated in the hurricane belt and when the hurricane hits us, it can hit us very hard and damage roads, infrastructure – it takes us out for a while.”
She said Jamaica had issued catastrophe bonds because “the day the [meteorological] office tells us that a very severe hurricane is on the way towards us – it’s too late to do the planning; so you plan well ahead of the eventuality of that catastrophe.”
The scale of the economic damage from Hurricane Melissa is still unclear but is likely to run into tens of billions of dollars, according to preliminary estimates. Pepukaye Bardouille, special adviser on resilience to the government of Barbados, told a press briefing on Friday that a $150-million payout was a “drop in the ocean” but useful as part of a stack of solutions.
Connor Meenan, a disaster risk specialist from the UK-based Centre for Disaster Protection, told Climate Home News that “the real value” of insurance is that “on day one, they’ve got certainty about a significant amount of money that they can call on in the near term so they can focus on directing that where it needs to be spent”.
“It’s certainly put them in a better position than it would have been had they not made all these efforts to put their finances in place ahead of time,” he said.
Unsustainable and unfair?
Ritu Bharadwaj, IIED’s director of climate resilience and loss and damage, warned that as the Earth’s climate heats up and catastrophes become more frequent, investors become less willing to bet against them happening, demanding higher premiums to do so. “It will become uninvestable,” she said.
Critics also raised climate justice concerns. Jamaica is in line for payouts because its government has been paying insurance premiums, which have to be large enough to entice investors to take on the risk of a disastrous hurricane occurring. Many countries whose governments are paying catastrophe bond premiums do not suffer catastrophes and so lose their money.
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Bharadwaj said it was “unfair” that taxpayers in countries like Jamaica are having to pay to insure against climate disasters they only played a small part in creating. Jamaica’s per-person emissions are about half the world average.
Conditions on when bonds pay out can also be strict, based on triggers like agreed wind speeds and central air pressure, with exact criteria varying in different parts of a country depending on historic precedents.
Last year, Jamaica missed out on a payment because, despite Hurricane Beryl causing about $1 billion of damage to the island, these triggers were not met.
Fending for themselves
Bharadwaj added that financial support from wealthy countries – like that in the UN’s new Fund for Responding to Loss and Damage (FRLD) – is insufficient to meet countries’ needs. The FRLD has $407 million in its bank account, which she said is likely far less than the losses suffered by Jamaica, let alone all the other countries in need of funding after climate-driven disasters.
Because of this “failure” of developed countries, multilateral development banks and the private sector to offer adequate funding, developing countries have to “fend for themselves”, she said.
As well as catastrophe bonds, she said governments should issue bonds – as Fiji has done – to raise money to invest in resilience measures. This can include dedicated resilience projects like flood defences and sea walls or making infrastructure like coastal hotels in Jamaica better able to withstand extreme weather, she said.
This spending, she said, should be seen as “not just doing good, not just impact investing [but] an investment that will yield benefit in the future” by preventing loss and damage.
Avinash Persaud, climate adviser to the president of the Inter-American Development Bank, argued in a recent article for Climate Home News that developing countries should have some of their debt written off if they invest in resilience.
Persaud’s native Barbados launched the world’s first of these debt-for-resilience swaps last year and a “multi-guarantor debt for resilience facility” is expected to be launched by international development banks at COP30 this month to make such swaps available to more countries.
Persaud and Bardouille have also argued for more lenders to introduce clauses saying that debt repayments will be paused when a disaster like a hurricane strikes.
The post Jamaica set for post-Melissa payout but experts warn of limits to hurricane insurance appeared first on Climate Home News.
Jamaica set for post-Melissa payout but experts warn of limits to hurricane insurance
The invigorating thing about public speaking is that you never quite know who is in the audience. There’s always a chance, of course, that someone wants to have a bit of a go at you, or maybe there’s an attendee with a particular take on things, who wants to ask one of those ‘questions that is more of a statement’; and then there’s those precious moments when the stars align and a memorable connection is made.
A couple of weeks ago, I’d participated in a panel discussion at an event, and the crowd was beginning to dissipate when a couple of strangers approached me to introduce themselves and say ‘hello’.
It turned out that Helen, Miranda, and I had all been in the same room in April, when each of us was part of the Greenpeace contingent inside Woodside’s 2026 Annual General Meeting in Perth, though we did not meet that day.
AGMs are significant set-piece occasions for companies, at which their corporate leadership wants to project competence and boost investor confidence. But for those of us with other concerns on our minds, an AGM is an opportunity to hold corporate leaders to account.
This year, a significant number of community advocacy groups, including Greenpeace, were present at Woodside’s AGM to challenge the company on its plans to drill for gas around Scott Reef—Australia’s largest freestanding oceanic reef atoll, and host to an incredible array of rare and endangered creatures, including green sea turtles and pygmy blue whales.
My role was to accept a shareholder proxy, suit up, and ask the company’s chair, Richard Goyder, some direct questions about the environmental damage that Woodside’s plans threaten to Scott Reef and the global climate.
Helen and Miranda, though, were present to play a completely different role. ‘We were a bit nervous that day’, Miranda told me. And no wonder, given what they were planning to do.
As new CEO Liz Westcott took the lectern, she was abruptly interrupted by a literally unearthly sound: whale song, playing from a speaker that Greenpeace activists had snuck into the room.
It was an aural haunting of Woodside’s AGM by the ghosts of its business strategy. Westcott opted to try to continue speaking, while security moved among the rows, attempting without success to work out where the sound was coming from.
When the whale track had played through, the relief on the podium felt palpable; but the return to corporate calm was short-lived.
Miranda, Helen, and other small groups of choristers—all evidently talented singers in their own right—began to stand up in small groups to perform a bespoke ‘Save Scott Reef’ variation on an iconic Australian song:
Hands off Scott Reef
Don’t be so Reckless
She don’t like that kind of behaviour…
It is a cliche, but true, to say that bravery comes in many different forms. It demands guts and resolve to stand up in a closed and heavily securitised room, with an unsympathetic audience; and to sing a song of no denying to one of the most powerful corporations in Australia, unaccompanied, from a cold start, with only your voices to fill the cavernous corporate space.
It was a wonderful thing to witness: the moral clarity of the message and the bold cheekiness of the activity; and a profoundly galvanising thing to feel, the indefatigable lifting of the spirit that we experience when we hear human voices rising in harmony and purpose. Miranda, Helen and their mates were brilliant.
Don’t be so Reckless…
As each small group rose in choreographed turn to pick up the song, they were apprehended by security and escorted out, singing to the last, as they were exited from the room.
Already, more than 500,000 people have joined the campaign to stop Woodside from drilling gas at Scott Reef. So when Helen, Miranda and friends stood up to sing, they did so on behalf of more than half a million people.
‘I’d never done anything like that before’, Helen told me, ‘I’d definitely do it again’.
Protest songs are both catalytic and emblematic of dynamic moments of social change. There is beauty, creativity, defiance, camaraderie and love to be found in singing together.
Helen and Miranda, it was great to meet you both. To you and all the other amazing folks who stood up and sang, thank you for your courage, commitment and the power of your voices. Your singing mattered for the half million, for the whales and the other creatures of Scott Reef, and for life in the ocean and on earth itself.
*As anyone of a certain age will probably recognise, the phrase is derived from the Midnight Oil anthem, US Forces.
Q and A
A few people have asked me recently about where the implementation of the national nature law reforms stand? Specifically, It seemed like good news when the Environment Protection and Biodiversity Conservation Act (EPBC) reforms were passed last year, but now it appears that they could be going wrong in the implementation. What’s happening?
We welcomed the Australian parliament’s passing of long-awaited nature law reforms just before Christmas last year as a fulfilment of an election promise, but remained clear-eyed that the proof of these reforms would be in how well they were implemented.
At this stage, the first two draft National Environmental Standards (NES) released by Federal Environment Minister Murray Watt’s department fall well short of what is required to actually protect nature. So things are once again in the balance.
The NES are the rules intended to guide decisions on projects that require assessment under the EPBC Act. They should draw a hard line to protect nature, but instead, the proposed standards are full of loopholes that legal experts warn are inimical to achieving the whole point of the Act–the protection of nature.
Glenn Walker who is Greenpeace Australia Pacific’s Head of Nature Program has mapped out the shortcomings of the NES in great detail on our blog. Greenpeace has made is views clear to both the Federal Environment Department and Minister Murray Watt, urging that the NES must be fixed, as have many others.
We are continuing to work closely with other environmental organisations, both to engage closely and to campaign publicly–there is still the opportunity to get this right to achieve the potential of the amended EPBC Act to actually do what it says on the cover–protect the environment.
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FOLKSTON, Ga.—The world’s smallest heron hops from blade to blade in a patch of tall grass, testing its footing above the dark water as it searches for an evening meal.
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