OUR approves multi-layered insurance plan for JPS ahead of 2026 hurricane season

Jamaica's Office of Utilities Regulation (OUR) has given its approval for a comprehensive insurance plan designed to protect the Jamaica Public Service Company (JPS) against hurricane-related damages. The approved coverage amounts to US$106.6 million and is structured as a parametric insurance framework, set to be implemented for the upcoming 2026 Atlantic Hurricane Season.

This risk-mitigation strategy serves as a crucial complement to the existing Electricity Disaster Fund (EDF), establishing a vital disaster risk-financing mechanism for the nation's electricity grid. Parametric insurance, which operates on an index-based system, offers rapid payouts triggered by specific, pre-defined events, thereby streamlining financial assistance in the aftermath of a disaster.

A key innovation of this framework is its dual-trigger coverage strategy. It integrates two distinct insurance products: one from the Caribbean Catastrophe Risk Insurance Facility (CCRIF), contributing US$56.6 million, and another from Descartes Insurance, providing US$50 million. This combination is designed to boost payout reliability and minimize basis risk, particularly during severe and complex storm events.

OUR Director-General Ansord Hewitt commended JPS's proactive initiative, noting its alignment with the OUR's recommendations for utilities to develop multi-layered disaster risk financing frameworks. He expressed hope that JPS's successful implementation would serve as a model for other utilities lacking similar protective measures. The total annual premium for this combined coverage is estimated at approximately US$6.6 million, with funding sourced from the EDF and JPS's operational cash flow.

“

This approach by the JPS is in line with OUR’s recommendation at the 12th Annual OUR Director-General Stakeholders’ Engagement on 2026 March 19, where the utilities were encouraged to explore and put in place a multi-layered disaster risk financing framework. I am glad to see JPS has taken this on board, and I am hopeful that this provides a template for other utilities that do not yet have such a framework in place.