Hurricane Melissa’s impact has left insurers anticipating one of the largest catastrophic loss events ever in Jamaica’s history, with estimated damages between US $2.2 billion and US $4.2 billion estimated by estimates from Reuters.
Category 5 Hurricane Maria made landfall in Jamaica this week with sustained winds of around 185 mph, making it the strongest hurricane to strike the island since records began being kept. Reuters
Wind damage accounted for most insured losses, though flooding and heavy rain contributed to total insured-loss estimates.
Bloomberg Law mes Why an Estimate of High Insured Losses Matters

These insured losses reflect not only the scale of destruction but also an accumulation of exposures in Jamaica’s property and tourism sectors. Reinsurers and catastrophe modelling firms are currently analyzing how low insurance penetration affects wider economic and recovery implications on the island, according to Insurance Journal.
Although insured losses may seem large, they only represent part of Jamaica’s total economic loss; estimates put total property damage and economic loss in Jamaica in the billions. Reuters Insurance Market and Exposure insights.

Insurance coverage in Jamaica remains very limited, according to industry reports; only a small proportion of residential properties are insured against extreme winds or flood damage, according to Insurance Journal reports.
Local insurers rely heavily on reinsurance and risk transfer mechanisms to cover large losses.
Insurance Journal Jamaica recently entered into a parametric catastrophe bond (US $150 million) linked to this event and Caribbean Catastrophe Risk Insurance Facility (CCRIF) will make an estimated payout of approximately US $70.8 million as part of their risk pool program CCRIF for storm-related claims that have occurred during 2017. For more information about CCRIF please visit: ccrif.org
These instruments may help soften the fiscal blow, but much of the burden for covering losses still falls to international reinsurers and the global insurance market.

Jamaica’s economy and recovery may be at stake.

Jamaica faces two burdens due to projected insured losses totalling nearly $4.21 billion: immediate rebuilding expenses and supporting those whose properties weren’t insured.

Public infrastructure, tourism assets, agriculture and coastal developments were all severely damaged during Hurricane Irma – with additional effects being felt across a country where many households or businesses had inadequate or no insurance coverage at all.

This tragedy highlights the economic vulnerability of small island states to extreme weather – particularly as climate change leads to increasing numbers of Category 5 landfalls and subsequent destruction. Furthermore, tourism infrastructure, luxury properties and coastal housing developments in hurricane-prone zones increase risk profiles for both insurers and governments alike.

What Happens Next
Insurance and reinsurance markets will closely observe Jamaica’s claims process, loss inflation, rebuild costs, and how much of them is recoverable. Modelling firms such as Verisk Analytics will provide loss ranges; reinsurers will then assess underwriting pricing, catastrophe exposure frameworks for this Caribbean region. Reuters will keep closely tabs on this development.
Jamaica will require coordinated public and private investment to recover, with government budgets under strain and international aid/risk-financing tools playing a vital role. Given that property value losses outstripped insured losses by more than 10%, many Jamaicans may face extended hardship without the safety net provided by insurance.

Overall, while Hurricane Irma caused significant damage and resulted in insured losses estimated to be US $4.2 billion, its impact has also demonstrated the wider issue of under-insurance as well as fiscal strain in Jamaica’s private and government sectors. As Jamaica begins rebuilding operations following this catastrophe, its magnitude will play a vital role in regional insurance market dynamics as a reminder that climate-driven extremes can pose national economic risk.