Verisk estimates Hurricane Melissa insured losses at up to $4.2bn

Verisk expects insured losses to onshore property in Jamaica from Hurricane Melissa to range between $2.2bn and $4.2bn.

The catastrophe modeller’s estimate includes damage from wind and precipitation-induced flooding, with most of the losses attributed to wind.

The Atlantic storm became the most intense hurricane to make landfall in Jamaica since records began and tied as the most intense hurricane landfall globally by pressure and wind speed.

Melissa formed on 21 October and rapidly intensified over exceptionally warm waters on 25 October.

With sustained winds of 185mph and central pressure of 892mb, it made landfall near New Hope in Westmoreland Parish on 28 October.

It then weakened over mountainous terrain before re-emerging off the north coast as a Category 4 system and later making landfall in eastern Cuba.

Verisk said the severity of damage should be understood in the context of Jamaica’s building standards and exposure.

It noted that around 70% of homes are built from masonry and 30% from wood, often constructed informally with minimal professional oversight.

“In these circumstances, significant damage and, in a number of cases, near total destruction of buildings is expected in the landfall area when a Category 5 hurricane brings 185 mph winds,” the report said.

Neighbourhoods in St Elizabeth parish reported widespread destruction, with up to 100% of roofs lost in some communities, including Black River and Barbary Hall.

Major structural damage was also recorded in Montego Bay, a key tourist area, from wind, storm surge and flooding.

Verisk warned that Jamaica’s historic building codes were not designed for wind speeds of this magnitude.

While a modern building code was introduced in 2003, legal enforcement only began in 2019.

This means many structures were not engineered to withstand the wind speeds experienced during Melissa, which exceeded design thresholds of 125mph to 130mph in affected regions.

Insurance penetration remains low across Jamaica, Verisk emphasised.

Verisk said residential insurance take-up rates are below 20% and many properties are underinsured.

It added that large portions of commercial and motor assets are also not insured.

The loss range excludes infrastructure damage, uninsured losses, storm surge, marine cargo, government schemes and loss adjustment expenses.

Melissa also caused thousands of fatalities and extensive disruption, but these wider economic impacts are not included in the insured loss figures, Verisk added.