KCC Estimates Privately Insured Losses From Hurricane Melissa Will Hit $2.4 Billion

Catastrophe modeling company KCC estimates that privately insured losses from Hurricane Melissa will hit $2.4 billion.

This estimate includes insured damages to residential, commercial, and industrial properties in Jamaica and Cuba, according to Boston-based Karen Clark & Co. in its “Flash Estimate – Hurricane Melissa,”.

KCC’s figure for insured damages is at the top end of another estimate 鈥� between $2.2 billion and $4.2 billion 鈥� provided earlier this week by data analytics firm Verisk.

Cotality, the property intelligence company (formerly known as CoreLogic), also has provided estimate for Hurricane Melissa of $1.5 billion, within the range of $1 billion to $2.5 billion.

However, Cotality explained, property damage rises to an estimated $5 billion-$9 billion when wind, surge, and flooding are combined.

“Persistent protection gaps remain: household and small-business insurance penetration is thought to be 5 to 20%, while coverage for large hotels, utilities and airports reaches 80% to 100%,” it said. (A Cotality representative explained that this loss estimate does not include automobile infrastructure, offshore marine, inland marine, and losses to other islands.)

As local insurers cede the majority of their catastrophe risk, reinsurers are expected to absorb most of the payout, Cotality said.

“A multi-billion-dollar insured loss, even a mid-single-digit figure in absolute terms, could represent one of the most concentrated reinsurance events ever seen in the Caribbean and could pierce several aggregate covers,” Cotality added.

Fitch Ratings confirmed that reinsurers will likely pay a higher amount of insured losses, “but losses are anticipated to be an earnings issue rather than a capital event.”

Fitch expects that commercial property and business interruption losses tied to high-end resorts near Montego Bay will be the largest contributors to insured losses, because the capital of Kingston was spared hurricane winds. On the other hand, residential property insurance penetration is low, Fitch confirmed in a market note issued on November 3.

Fitch said the hurricane will trigger the $150 million, International Bank for Reconstruction and Development (IBRD) Capital-at-Risk (CAR) Jamaica 2024 parametric catastrophe (cat) bond.

This bond had an annual coupon of SOFR plus 7.19% and an initial attachment probability of 2.34%, which implies roughly a 1-in-45 year event to trigger a loss, said Fitch, noting that holders of the note (15 in total) were split 66% to specialized insurance-linked securities (ILS) fund managers and 33% to asset managers.

Fitch does not expect any adverse ILS market reaction to this cat bond payout. “Investors are aware of the principal loss risk, and calendar year 2025 will mark the third consecutive year of record issuance exceeding $20 billion,” Fitch continued.

Meanwhile, the Caribbean Catastrophe Risk Insurance Facility (CCRIF) announced on October 31 it will make a payout of US$70.8 million to the government of Jamaica to cover damages from Hurricane Melissa.

This marks the largest single payout in the history of CCRIF, the Cayman Islands-based parametric catastrophe facility. Subject to final model verification, this payout will be made within 14 days.

Melissa’s Meteorological Highlights

Hurricane Melissa made two landfalls: in Jamaica on October 28 as a Category 5 hurricane with maximum sustained winds of 185 mph, and in Cuba on October 29 as a Category 3 hurricane with 120-mph winds, said KCC in its Flash Estimate for Hurricane Melissa.

Hurricane Melissa is the third category 5 hurricane of the 2025 Atlantic season and the first storm of this magnitude to hit Jamaica in recorded history.

Photograph: Damage from Hurricane Melissa, in Black River, Jamaica. Photo credit: Ricardo Makyn/AFP/Getty Images

Topics Catastrophe Natural Disasters Profit Loss Hurricane

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