Waylon Wong

They're fact-checked by Sierra Juarez.

Kiki Cannon is our show's editor.

This episode of Planet Money was produced by Luis Gallo with help from James Sneed.

It was edited by Planet Money's executive producer, Alex Goldmark.

I'm Waylon Wong.

This is NPR.

Thanks for listening.

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.