AS Jamaicans across the island work to rebuild their lives in the aftermath of Hurricane Melissa, a financial instrument called a catastrophe bond or cat bond could soon provide the Government with a vital financial cushion.
What Is a Catastrophe Bond?
A catastrophe bond is a special kind of insurance-linked investment that helps governments and insurers protect themselves against large-scale natural disasters.
Instead of paying premiums to a traditional insurance company, the Government raises funds from international investors through a bond. Those investors receive attractive interest payments but only as long as no major disaster occurs.
