Best’s Commentary: Jamaica's Insured Losses From Hurricane Melissa Likely to Fall to Reinsurers

OCTOBER 28, 2025 05:42 PM (EDT)

Best's Commentary: Jamaica's Insured Losses From Hurricane Melissa Likely to Fall to Reinsurers

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OLDWICK - OCTOBER 28, 2025 05:42 PM (EDT)Although insured losses in Jamaica from Hurricane Melissa will be low, reinsurers will likely pick up most of the total due to Caribbean-domiciled carriers' reliance on reinsurance, according to an AM Best commentary. In its Best's Commentary, "Jamaica's Insured Losses From Hurricane Melissa Likely to Fall to Reinsurers," AM Best notes that insurance penetration in Jamaica is low as only a small portion of property is insured on the island, which will limit insured losses. However, economic losses are likely to be in the billions, and as a Category 5 hurricane, it is posing a serious threat to the lives of those on the island. Once the storm passes, the primary focus will be humanitarian aid to the residents and visitors to the island, and so it will likely be days or weeks before insured loss estimates are made. As catastrophic losses from hurricanes, flooding and earthquakes are biggest risk to property insurers in the region, the primary mitigation tool against these exposures for insurers is a significant use of reinsurance. "Reinsurance partnerships are the cornerstone that provides the capacity for insurers to write property business in the Caribbean," said Bridget Maehr, director, AM Best. "It remains to be seen how this event will affect reinsurance pricing going forward." The commentary also states that while entities such as the Caribbean Catastrophe Risk Insurance Facility have provided some economic relief to the governments of member countries, which include Jamaica, going forward, a combination of macro-initiatives and microinsurance may have greater potential in narrowing Jamaica's and the region's protection gap. At the same time, catastrophe models in the Caribbean are generally not as robust as the ones used to model for U.S. hurricanes. "Modeling in the Caribbean region presents greater challenges, owing to disparate building codes and data quality, as well as their proximity and vulnerability to catastrophic events," said Sridhar Manyem, senior director, Industry Research and Analytics. "Models need to consider the correlation of events between geographies in the region, as catastrophe risk can potentially be spread across the entirety of the Caribbean." AM Best will continue to monitor the impact of Hurricane Melissa on Jamaica, as well as other Caribbean islands, including the eastern Bahamas and Turks & Caicos islands. To access the full copy of this special report, please visit https://http://www3.ambest.com/bestweek/purchase.asp?record_code=359362.