Waylon Wong

For Fayval, for all Jamaicans, this is unfortunately a familiar scene after hurricanes.

Only Hurricane Melissa was worse.

It was a Category 5, winds of 185 miles per hour.

And now people were adding up what they had lost, trying to figure out how they would get it back.

In particular, she was thinking about this one kind of unusual financial maneuver that Jamaica was experimenting with.

It was a wager.

And I'm Waylon Wong.

A few years ago, the Jamaican government went all around the world saying to investors, we bet we're going to have a pretty big hurricane in the next couple of years.

You want to take the other side of that bet?

Basically, if there's no hurricane, you investors get your money back and more.

But if there is a hurricane, a big enough hurricane, the Jamaican government gets to keep your money and use it to pay for rebuilding.

Catastrophe bonds are like the ultimate form of insurance, because if you think about it, that's what insurance is.

It's a bet involving potentially bad outcomes, whether that's a car crash or a house burning down or a Category 5 hurricane.

And the story of how betting on natural disasters became a market, a big thriving market, really starts with this one person.

My name is Karen Clark.

People have actually called Karen an icon.

OK, so Karen might not have been a child genius, but she was way ahead of her time.

In grad school, when she was, what, 12, she studied how to run simulations on these cutting edge machines that people were calling computers.

That landed her a job at an insurance company where her bosses asked her to apply her skills to the problem of hurricanes.

Which is why your insurance company will actually buy insurance for itself.