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How hurricanes became a hot investment

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How hurricanes became a hot investment

Planet Money

2025/12/05
Planet Money

Planet Money

2025/12/05
OverviewShownoteHighlightsTranscriptChaptersPins

Shownote

A few years ago, the Jamaican government started making an unusual financial bet. It went to investors around the world asking if they'd like to wager on the chances a major hurricane would hit the island in the next couple of years.  In finance terms, t...

Highlights

In the face of escalating climate threats, countries and institutions are turning to an unconventional financial tool—bonds that don’t just promise returns, but are tied to the fate of natural disasters. What started as a niche idea has grown into a global market reshaping how we prepare for catastrophes.
10:00
Karen's model predicted Hurricane Andrew losses accurately.
18:52
Cat bonds yield 8% to 13% and are used for hurricane coverage in Florida
24:30
The World Bank raised over $300 million from investors to help developing countries in case of a global pandemic.
25:26
The World Bank raised over $300 million through pandemic cat bonds in 2017, which triggered in 2020 for COVID-19 relief.
30:00
Hurricane Melissa triggered the bond, and Jamaica will receive $150 million.

Chapters

What happens when a country bets against a hurricane?
00:00
How one woman changed how we predict disaster damage
06:35
Was Hurricane Andrew the moment catastrophe models proved their worth?
09:47
Why investors are flocking to disaster-backed bonds
15:45
Can a bond protect the world from a pandemic?
22:10
Did the pandemic bond actually work when crisis hit?
25:26
When disaster strikes—did Jamaica’s gamble pay off?
28:24
Could the future of disaster relief be traded on Wall Street?
31:42

Transcript

Speaker 3: Support for NPR and the following message come from Edward Jones. A rich life isn't always a straight line. Unexpected turns can bring new possibilities. With a hundred years of experience navigating ups and downs, Edward Jones can help guide yo...