Melissa Insurance Payouts Hit J$54B as Home Premiums Climb

A year on, the bill is clearer, and so are the gaps

Hurricane Melissa came ashore on 28 October 2025. Almost a year later, Jamaica's insurers have published their most detailed account yet of what they have paid. The Insurance Association of Jamaica (IAJ) reports that member companies have settled 8,357 claims linked to the storm and paid out $54.35 billion. Of that, $51.9 billion went to residential and commercial property claims and $2.3 billion to motor claims, with figures running to the end of September.1 Commercial property took the largest share, $41.6 billion or about 80 per cent of the property total, while homeowners received $10.3 billion.1

The money followed the storm's path. St James alone accounted for $30.5 billion. Hanover, Westmoreland, St Ann and St Elizabeth followed, and together the five parishes received more than $40.1 billion in property payouts.1 St Elizabeth stands out. It was among the hardest-hit parishes but received only $1.43 billion, and the IAJ attributes that to low insurance penetration there.1

The headline total is real progress. But it is a payout figure, not a measure of how well Jamaica was protected, and the two should not be confused. Taken together, the coverage describes an industry that has paid out a lot of money, still has a hard core of unresolved claims, and is now pricing in the lessons of the storm in ways households will notice at renewal.

What remains unpaid

There are 983 claims still outstanding, 740 of them on residential and commercial property.1 Engineering claims are the most stubborn category: 45 per cent are still open, which the association puts down to complex assessments. Insurers have made interim payments on 205 open property and engineering files.1

Settlement rates by category show a clear split. Ninety per cent of motor claims and 77 per cent of Jamaican-dollar claims have been fully settled. For non-motor claims the figure is 54 per cent, and for US-dollar-denominated claims, which tend to be the larger commercial and tourism policies, it is 49 per cent.35 Motor is plainly the best-performing line.6

The timing matters. In August, regulators, insurers, brokers and loss adjusters issued a joint statement committing to settle most eligible claims, excluding complex and litigated ones, by the end of September 2026.9 Coverage disagrees on how to judge that pledge. One local analysis argues the September figures cannot be measured directly against the target, because the categories and exclusions were never published on the same basis.2 The Jamaica Hotel and Tourist Association (JHTA) is blunter: it says the commitment was simply not met.7 The pledge was loose enough that nobody can be held to a missed number. That looseness is itself the main reason trust has worn thin.

The fight over the average clause

The tension now is less about speed than about how much each claim is worth. A JHTA survey found only 39 per cent of tourism claimants fully settled. Seven in ten said deductions went beyond what they understood their average clause to allow, and about a third reported deductions above 40 per cent of the claim.2 JHTA president O'Brian Heron accuses insurers of revaluing properties above previously accepted values and then declaring them underinsured.7 IAJ executive director Everton McFarlane replies that insurers cannot settle under pressure, because that would have consequences for overseas reinsurers.7

The Financial Services Commission (FSC) has opened a review of how the average clause is being applied. The clause cuts payouts in proportion to underinsurance.9 The scale of the problem is large. Industry figures suggest 70 to 75 per cent of Melissa claims involve underinsurance8, and an estimated 95 per cent of insured homes may be covered below full replacement value.25 Even before the storm, fewer than one in five Jamaican homes carried insurance at all.

Political pressure has been rising too. Prime Minister Andrew Holness has repeatedly pushed private insurers to pay faster, arguing that delays are holding back recovery.6 IAJ president Rosemarie Henry has acknowledged the strain on policyholders and said the industry must learn from the storm.4

Why the payout looks small against the damage

The planning agency estimated total damage and losses at J$1.952 trillion, about US$12.3 billion or roughly 56.7 per cent of 2024 GDP.8 Implied by that conversion, the $54.35 billion paid so far is equivalent to roughly a few hundred million US dollars. Modelled insured losses were far higher: Verisk put onshore property at US$2.2–4.2 billion, and AM Best cited non-US insured losses of about US$3.5 billion.31

The sources do not reconcile these numbers. Read together, they suggest several things: the largest and most complex claims are still open, underinsurance is cutting settlements well below modelled losses, and early catastrophe models for the Caribbean were uncertain. AM Best has warned that Caribbean models are less robust than US ones.17 Either way, most of the economic loss sits outside the insurance system entirely.

The government's own layered cover worked faster. The CCRIF facility paid US$70.8 million for wind and storm surge and another US$21.1 million for excess rainfall.13 The US$150 million World Bank catastrophe bond paid out in full.19 Jamaica has since placed a larger US$200 million cat bond, oversubscribed and priced at a 6.75 per cent risk margin, the low end of guidance. This is the clearest contrast of the past year. Parametric cover that pays on a trigger reached the treasury within weeks, while indemnity policies held by businesses and homeowners are still under dispute.

Premiums: global softening, local hardening

The premium question is where coverage diverges most. Globally, reinsurance got cheaper. Guy Carpenter's property catastrophe rate-on-line index fell about 12 per cent at the 1 January 2026 renewals, because Melissa's roughly US$2.5 billion insured loss did little damage to a well-capitalised market.35 AM Best reported in February that reinsurance costs and capacity constraints were easing for Caribbean insurers.31

Inside Jamaica, the picture is different. The general insurance industry's net profit fell from $2.6 billion in 2024 to $30 million in 2025. The sector also faces lower reinsurance commissions, possibly higher reinsurance costs, and an extra $646.19 million in FSC regulatory fees, $500.05 million of which falls on general insurers.33 Whether those costs reach policyholders is officially still unclear.33 Insurers in the Bahamas expected Melissa's fallout to stay confined to Jamaica's own reinsurance programme.32 Even so, they warned their customers not to expect meaningful price cuts for 2026.36

My reading is that Jamaican policyholders will not get the relief the global softening might suggest. Higher fees, depleted earnings and losses concentrated on Jamaica all point the other way. AM Best has also noted that Caribbean insurers set rates largely by what reinsurance costs them, and that conditions can turn quickly after a major storm.31

Home insurance: the squeeze arrives through valuations

For homeowners, higher costs are arriving less through headline rate rises than through revaluation. Real estate coverage reports increases of 25 to 40 per cent for some low-lying and flood-prone coastal properties. Some owners have been refused domestic cover and sent to more expensive international markets.22 Mortgage customers describe premiums being raised automatically when homes are found to be underinsured. One borrower saw more than J$12,000 added to his monthly payment before it was refunded after he complained.25

Relief has been targeted. The National Housing Trust waived about J$585 million in peril insurance premiums for roughly 36,000 mortgagors in the hardest-hit parishes.24 It also kept its peril premium unchanged for the insurance year starting 1 September 2026.26 Commentators warn that a year of claims disputes could convince more households that insurance is not worth the cost. That would widen a protection gap Jamaica can least afford.21

Auto and health: different pressures

Motor insurance has been the quickest line to settle. But motor rates across the Caribbean were already rising before the storm, because of imported parts costs, repair delays and a shortage of trained mechanics.31 Melissa's motor payouts of $2.3 billion are small next to the property bill1, so motor pricing is likely to keep following those structural repair costs rather than the hurricane itself.

The coverage gives no direct evidence on health insurance costs. The IAJ's Melissa figures cover general insurance. The one documented new cost for life insurers is an extra $146.14 million in FSC fees33, and readers should be wary of claims that the storm will drive up health premiums.

What to watch

The next test is whether the final 983 claims, especially the large commercial and engineering files, are settled with calculations that policyholders can follow. The IAJ has asked members to explain how deductibles and the average clause were applied and to give expected timelines.4 If the FSC's review leads to clearer valuation rules, the dispute could end up strengthening Jamaica's insurance market. If not, the J$54 billion paid out so far may be remembered less for its size than for how slowly it arrived.