Hurricane Melissa, one of the strongest storms to hit Jamaica, has caused the island an estimated $22 billion in damages and economic loss, according to American forecaster AccuWeather.

The event appears to have reached the predefined parametric trigger for a full payout of Jamaica’s $150 million catastrophe bond with the World Bank.

The parametric coverage uses a grid system to divide the island into 19 distinct squares. A payout is triggered when a named tropical cyclone passes through one of these boxes and the central pressure there falls below certain parameters.

The island missed out on cashing in the bond with Hurricane Beryl, the category 4 storm that passed in July 2024, despite being hit with losses nearing a billion dollars.

The barometric pressure measured just a few millibars above the requirement for the payout.

This time the readings are thought to be low enough to qualify.

The practice of using barometric pressure to determine the level of damage is controversial.

In 2014, after category 3 Hurricane Odile hit Mexico, the country could not cash its MultiCat Mexico 2012 catastrophe bond because the central pressure was not low enough.

This week, credit ratings agency AM Best has predicted that the majority of Jamaica’s insured losses will fall on reinsurers.

“Jamaica’s insurance penetration is low, less than 5 per cent, as only a small portion of property is insured on the island; consequently, insurance losses from Hurricane Melissa are likely to be low,” AM Best reported.