After years of spiraling property insurance premiums, Jamaica’s insurance industry is cautiously optimistic. Global reinsurers, once strained by inflation and market volatility, are gradually signaling a renewed appetite for Caribbean risk—offering local insurers a potential break from mounting reinsurance costs.
For years, regional insurers faced steep premium hikes as global reinsurers, reacting to capital erosion and unstable returns, pulled capacity from markets deemed marginal. The Caribbean, frequently battered by natural disasters yet often delivering modest returns, found itself near the top of that list. The result: policyholders—especially in the commercial sector—saw insurance premiums skyrocket, with residential increases lagging only slightly behind.
Now, as the dust begins to settle on a turbulent global insurance landscape, reinsurers are quietly edging back in.
“The shift is subtle but real,” said one senior executive from a leading local insurer. “Balance sheets abroad have recovered, catastrophe loss ratios are improving, and the appetite for diversification—particularly into traditionally neglected regions—is returning.”
Reinsurance contracts, typically renewed on an annual basis, are the lifeblood of the insurance sector. Without sufficient coverage from global reinsurers, local firms can neither underwrite large risks nor maintain solvency during high-claim periods. In Jamaica, all participating reinsurers must meet regulatory capital standards, ensuring financial strength and international credibility.
While the cost of reinsurance remains elevated compared to pre-2020 levels, insiders say the sharp upward curve appears to be flattening. The industry isn’t forecasting a dramatic rollback of prices, but a leveling-off in reinsurance rates could trickle down into more stable—or even modestly reduced—local premiums over the next cycle.
Still, there is a caveat. Jamaica continues to face a persistent problem with underinsurance. According to recent internal assessments, only one in five Jamaican homes is insured—and nearly all of those are underinsured, often based on outdated valuations or insufficient coverage limits.
This prompted the Insurance Association of Jamaica (IAJ) to launch a public education campaign aimed at correcting misconceptions and encouraging property owners to reassess their insurance needs. The campaign underscores the risk of assuming old policies still offer adequate protection in today’s costlier construction and property market.
“We’re working to dispel myths that insurers sit on large reserves while denying claims,” said Everton McFarlane, Executive Director of the IAJ. “Insurance is not a static fund; it’s a live ecosystem with ongoing obligations—claims, administration, tech investment, compliance.”
Indeed, the sector has absorbed substantial losses in recent years. Property-related payouts in 2024 alone totaled over $2 billion, further tightening the margin between collected premiums and actual claims disbursed. And while fewer natural disasters occurred this year, climate unpredictability remains a looming threat, complicating long-term planning and pricing.
Chaluk Richards, Vice-President for General Insurance within the IAJ, emphasized that underinsurance doesn’t just jeopardize homeowners—it also undermines the entire insurance pool.
“When people are underinsured, settlements fall short, recovery slows, and faith in the system weakens. That erodes trust and participation across the board. Financial literacy is the bridge we need to build,” Richards said.
He added that the IAJ’s campaign is now working directly with individual firms to improve client awareness and clarify what adequate coverage really looks like—beyond simply meeting a mortgage requirement.
As reinsurers begin to circle back and market volatility eases, Jamaica’s insurance ecosystem faces a window of opportunity. But translating global optimism into local resilience will depend not just on pricing shifts—but on education, regulation, and trust.
