Hurricane Melissa’s catastrophic impact on Jamaica is set to generate economic losses far exceeding insured losses, according to a new analysis by Moody’s Ratings.
The Category 5 storm devastated western Jamaica on Tuesday, unleashing destructive winds reaching 185 mph. It caused extensive property damage, forced evacuations, triggered widespread power outages, and led to infrastructure collapse and tragic loss of life.
The disparity between economic and insured losses reflects Jamaica’s low insurance penetration, with only about 20% of residential properties insured. Of those insured, an estimated 95% are underinsured, according to the Insurance Association of Jamaica. As a result, most of the storm’s financial burden will fall on uninsured households and the public sector, underscoring the region’s acute vulnerability to extreme weather events.
“We expect that the economic losses will be multiples of the insured losses, because Jamaica, like other countries in the Caribbean, has low levels of insurance coverage in comparison to more developed countries,” Moody’s stated.
International insurers and reinsurers covering commercial property, particularly hotels and resorts, along with local Jamaican and Caribbean insurers covering smaller risks, face the greatest exposure. According to Jamaica’s Financial Services Commission, 11 general insurers held assets totalling approximately JMD 108 billion (£670 million) as of June 30, 2025.
Moody’s expects Hurricane Melissa losses to weigh on fourth-quarter earnings for some global property and casualty insurers and reinsurers.
After striking Jamaica, Hurricane Melissa moved toward Haiti, Cuba, and the Bahamas – countries also considered highly exposed to physical climate risk. Moody’s noted that it could take weeks or months before total economic and insured loss estimates are finalised.
Jamaica, rated B1 positive, is among the most exposed rated sovereigns to natural disasters, with climate-related events occurring roughly once per year on average over the past decade. Moody’s expects Hurricane Melissa to cause a severe but temporary contraction in Jamaica’s real GDP, primarily due to disruptions in tourism, agriculture, and infrastructure.
The Jamaican government has developed disaster risk financing mechanisms to help meet immediate post-disaster needs. These include contingent credit lines from the Inter-American Development Bank amounting to about 4% of GDP, insurance coverage through the Caribbean Catastrophe Risk Insurance Facility, and a $150 million parametric catastrophe bond issued in May 2024.
According to Artemis, the bond, triggered by predefined parameters such as wind speed, is likely to pay out in full given the storm’s magnitude.
However, these financial buffers will be insufficient for a hurricane of Melissa’s scale. Moody’s anticipates significant support from international donors, who have provided aid to Jamaica after previous disasters.
Several of Jamaica’s largest resort areas, including Montego Bay, Negril, and parts of the South Coast, were severely affected. Business interruption losses could prove substantial, as restoring infrastructure will take time.
Flood damage was significant due to heavy rainfall, the hurricane’s slow movement and storm surge. Demand surge—a sharp rise in demand for materials and labour—will likely push up rebuilding costs and, in turn, insured losses.
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