Risk and insurance

In 2025, global natural catastrophe losses covered by insurance and reinsurance capital exceeded US$100 billion for the sixth consecutive year, with the latest projected losses estimated at US$107 billion, according to the Swiss Re Institute. The institute is the research and knowledge sharing arm of Swiss Re, one of the world’s largest reinsurance companies. Many of the local and regional insurers obtain reinsurance protection from the research institute’s Zurich-based parent.

The Los Angeles wildfires, which occurred at the beginning of the year, and severe storms were the main contributors to the insured losses last year. The total in 2025 was 24 per cent less than the US$141 billion in 2024 (due to Hurricanes Helene and Milton). The USA accounted for four-fifths of all the losses last year. That country continues to be the dominant financial exposure to severe weather and catastrophes for the global insurance and reinsurance industries.

Firms like Swiss Re insure insurance companies. They have been operating for over a century and transact business on a global scale. Policymakers, technocrats, regulators, insurance company executives, and others, especially in small island developing states like Jamaica, which suffered back-to-back Category 5 hurricanes in 2024 and 2025, should pay attention to the advice that Swiss Re offers – much in the same way that investors pay close attention to the words from the legendary pen of Warren Buffett, nicknamed the ‘Oracle of Omaha’.

Jérôme Jean Haegeli, Swiss Re’s group chief economist, quoted on the site Artemis.bm last December, issued a caution:

“Amid annual volatility, insured losses keep rising. That is why strengthening prevention, protection, and preparedness is essential to protect lives and property. Reinsurers and the broader insurance sector have a dual role: acting as financial shock absorbers and supporting the development of resilient, risk informed public policy, and private investment that reduce future losses.”

Local insurers and intermediaries accept the first part of the mission, i.e., playing the role as financial shock absorbers. They deem the second part as problematic. That part can create direct benefits for policyholders, insurers, and society. Recent newspaper articles suggest strong demand for these services after Hurricane Melissa. In the meantime, insurers seem to be missing in action in the recovery policy debates and in proposing solutions to facilitate resilience throughout the island.

Why is it that Eugene Kelly, councillor for the Whitfield Town Division in St Andrew South West, is seeking government help for the setting up of a small business disaster fund to protect operators plagued by fires? Does GOJ have any competence or expertise in this area? Similarly, the mayor of Savanna-la-Mar is seeking help from the same source to protect businesses from man-made and natural disasters.

Civil engineer, land developer, and climate change scientist Christopher Burgess wrote a first-class article for laypersons, ‘Upgrading Insurance and Infrastructure’, published on December 14, 2025. A key part of it read: “In 70 years, Jamaica has seen a tenfold increase in hurricane damage. Hurricane Charley (1951) – US$900 million (in today’s terms); Hurricane Gilbert (1988) – US$3.0 billion; Hurricane Melissa (2025) – US$8.75 billion in direct damage, plus at least US$2.0 billion in losses to the productive sector.” Notably absent were estimates for the damage caused by Hurricane Beryl in 2024 and other preceding hurricanes. The escalating impacts, he wrote, “reinforce the need for stronger disaster risk financing since DRF provides predictable, rapid funding after extreme events and protects the budget from shocks. Regional climate damage models in 2015 predicted this escalation in hurricane damage.” The Government’s existing disaster risk financing framework is dwarfed by the actual losses caused by Hurricane Melissa.

Even though Mr Burgess discussed the Government’s significant underinvestment in protecting the economy from shocks, there was no reference in his article to

underinsurance and non-insurance of assets owned by households and private-sector interests. SMEs, among others, appear to be relying on government assistance to fund the recovery of their businesses.

Sunday Observer staff reporter Tamoy Ashman suggested in her December 28 article that Minister of Agriculture, Fisheries and Mining Floyd Green concluded that after Hurricane Beryl in 2024, “something close was not going to happen … for another 20 years …”. Presumably, he was ignorant of the regional climate change model to which Mr Burgess referred, or the November 1999 prediction of the late Colorado State University climatologist Dr William Gray that “another 20 years of intense storms will hit the Caribbean belt”, or that in 2017 Puerto Rico suffered damage caused by Category 5 Hurricane Irma on September 6. It was followed by a direct hit from Hurricane Maria, a Category 4 storm two weeks later.

The Coconut Industry Board (CIB) devoted three columns of its 80th anniversary supplement discussing, in broad strokes, the development of a modern insurance model against the background of more frequent and intense climate-related events. It considers this work one of its most important strategic priorities. The CIB leadership should be congratulated on its adoption of this model. Other organisations should emulate this approach.

If you require assistance managing risks or solving insurance problems, Cedric E. Stephens offers free counsel and advice. To obtain information and counsel, please write to The Business Editor at business@gleanerjm.com or contact Mr Stephens directly at aegis@flowja.com. Letters and e-mails will be edited for clarity and length.