Belize Secures US$20 Million in Hurricane Disaster Protection

Belize has secured up to twenty million US dollars in financial protection to help the country respond quickly if it is hit by a major hurricane during the next two hurricane seasons. The arrangement was organized by the Inter-American Development Bank (IDB) and backed by global reinsurance company Swiss Re. It is the first time the IDB has arranged this type of disaster-protection agreement for one of its member countries.  The coverage took effect on August 1, and will remain in place until May 31, 2028, covering the 2026 and 2027 hurricane seasons.  Under the agreement, Belize could receive up to ten million US dollars in each policy year. However, the payment is not automatic whenever a hurricane strikes. The storm must meet certain conditions agreed upon in advance, such as its strength and location.  This type of arrangement is known as “parametric” coverage. Unlike traditional insurance, which normally requires officials to assess the damage before money is released, a parametric policy can provide funds quickly once the agreed storm conditions are met.  The IDB says the arrangement is intended to give Belize faster access to money for emergency response and recovery following a severe hurricane.  Belize contributed toward the cost of the coverage, with additional support coming through the IDB’s Ready and Resilient Americas Initiative and contributions from the French Climate Fund.  The new protection adds to other disaster-financing arrangements Belize already has with the IDB. These include twenty-five million US dollars in emergency credit and climate-related clauses covering one hundred and eighteen million US dollars in loans. Those clauses allow Belize to postpone loan principal payments following a qualifying disaster.  The IDB says the agreement demonstrates how vulnerable countries can transfer some of their disaster risk to international insurance markets instead of depending entirely on their own finances after a major event.