Cayman considers catastrophe bond, more parametric insurance to expand hurricane protection

As the 2026 Atlantic hurricane season approaches, the government of Cayman is considering expanding its hurricane protection by turning to the insurance-linked securities (ILS) market to potentially issue its own catastrophe bond, while simultaneously expanding its parametric insurance coverage too, Cayman Compass reports.

The Cayman Islands are considered to be highly prone to hurricanes. The islands are very low-lying, which makes them extremely vulnerable to storm surges, where the ocean is pushed inland by high winds.

Cayman’s Minister for Finance and Economic Development Rolston Anglin told the Cayman Compass that his ministry has decided to increase the islands’ insurance coverage for natural catastrophes.

“We agreed within the Ministry of Finance that it was time to review the current coverage level – it has been in place for a considerable period of time. Our exposure has increased. The country has grown, and there are more assets at risk,” Anglin said.

The growth of Cayman’s population, economic productivity, and constructed environment clearly suggests that the region may face significantly greater financial losses in the event of a hurricane.

As Artemis’ readers are aware, there are two key insurance options available to Cayman, one of which would be for the government to issue its own catastrophe bond.

Another option is to increase Cayman’s coverage in CCRIF SPC, formerly known as the Caribbean Catastrophe Risk Insurance Facility, a regional catastrophe fund that provides specialised, parametric insurance to Caribbean and Central American governments.

“We will look at all options, including catastrophe bonds, increasing traditional coverage, and parametric solutions, and then assess them holistically,” Anglin told Cayman Compass.

In terms of whether Cayman will issue its own catastrophe bond, Anglin stated: “It comes down to cost. The key question is whether the cost justifies going down that route.”

While in regard to increasing Cayman’s CCRIF coverage, Anglin further explained: “We are also reviewing our current level of coverage. I will need to make a decision on that shortly, as hurricane season is approaching and policies are up for renewal.”

Catastrophe bonds and parametric coverage proved to be highly useful for Jamaica last year shortly after the country was hit by major hurricane Melissa.

Shortly after Melissa struck Jamaica, CCRIF announced that it would make its biggest single payout after Melissa triggered Jamaica’s tropical cyclone policy, with US $70.8 million being paid to the country.

However, not long after this, we also reported that Jamaica was set to also benefit from a US $21.1 million payout under its CCRIF SPC parametric excess rainfall policy, which took the total that the country would receive to $91.9 million.

As well as this, the World Bank also announced that the Government of Jamaica would receive a full 100% payout of its $150 million IBRD CAR Jamaica 2024 parametric catastrophe bond.

It’s important to note that Cayman’s need for increased natural catastrophe cover also comes as the  global reinsurance market is experiencing a softening trend in 2026.

Michael Gayle, CEO of Cayman’s government-owned insurer CINICO, and CCRIF board member, views  this shift as a market correction following several years of restricted capacity and rising rates.

“For the years 2023 and 2024, there was a contraction in available reinsurance capacity. But as rates have gone up locally we have seen a return of capacity in the reinsurance market, [that is] coupled with the fact [that international reinsurers] had a couple of good years – Hurricane Melissa for example didn’t really move the meter in the international reinsurance market it fell within the range of expected losses for the year,” Gayle told Cayman Compass.

Anglin also highlighted how market conditions can make premiums more favourable at renewals.

“However, for government, the primary consideration is risk, not just price. The key issue is exposure – there is more at stake now. That is why we are reviewing our position before renewal,” Anglin concluded.