The present study investigates the feasibility of wind index-based insurance, using an approach where payouts are based on the output of a model which is able to simulate the winds associated with cyclones occurring over Jamaica during the hurricane season, from July 1st to November 30th. The model considers the spatial distribution of winds associated with past storm events held in the National Oceanic and Atmospheric Administration (NOAA) Caribbean basin database, including storm characteristics as well as physical features such as topography. Farmers are grouped into 16 zones, according to districts and altitude bands, for the purpose of payouts. Vulnerability functions according to the stage of growth, and exposure patterns based on monthly expected reaping of coffee, were prepared by the CIB and used to correlate, as closely as possible, the payout levels against the expected loss of coffee. The generated payouts from past major events were compared with known industry losses, as a method of validating the parameters within the model.
