The local insurance sector is finally catching its breath. After two turbulent years in which reinsurers hiked prices and trimmed capacity, early indicators now point to a gentler market ahead—one that could translate into smaller premiums for Jamaican homeowners and businesses.
Reinsurers Reset the Dial
Global reinsurers spent 2022 and 2023 nursing capital erosion triggered by inflation, weak currencies, and sinking bond portfolios. Their defensive playbook was clear: exit marginal territories or ratchet prices high enough to justify the risk. Caribbean markets felt the squeeze first, absorbing premium jumps that often doubled for large commercial accounts and climbed 40-50 per cent for residential policies.
That posture is changing. Fresh capital, stronger balance sheets, and a gradual return of risk appetite have reinsurers eyeing the region again. Industry veteran Peter Levy notes that while the pendulum won’t swing back to the rock-bottom rates of pre-2020, “the momentum has clearly shifted from relentless increases to a flattening, and even modest decreases, in reinsurance pricing.”
Capacity Still King
Because most treaties renew on a calendar-year cycle, Jamaican insurers must secure fresh capacity every January to keep writing property cover. By rule, those reinsurers must hold at least a “BBB” credit rating—think Munich Re, Transatlantic Re, Everest Re—that meets Financial Services Commission standards. As these heavyweight players grow more comfortable deploying capital, local carriers expect the cost of capacity to edge lower, offering room to trim end-customer premiums.
The Underinsurance Epidemic
Lower premiums will help, but they won’t fix Jamaica’s deeper problem: only one in five homes carries insurance, and 95 per cent of those policies understate replacement value. The Insurance Association of Jamaica (IAJ) has therefore launched a nationwide push urging households to reassess coverage levels, update sums insured, and avoid the shock of a post-disaster shortfall.
Vice-President Chaluk Richards puts it bluntly: “If your policy value hasn’t moved in five years, you’re gambling. Construction costs have outpaced inflation, and a payout based on yesterday’s numbers won’t put a roof back over your head tomorrow.”
Where the Premium Dollar Goes
IAJ Executive Director Everton McFarlane tackles a common misconception: that premiums simply pile up in an untouched pot until disaster strikes. In reality, 2024 alone saw net property losses top J$2.4 billion, up from J$1.6 billion the year before. Add salaries, technology upgrades, and day-to-day operations, and the myth of the idle premium fund quickly dissolves. “Insurance is capital-intensive,” McFarlane reminds skeptics. “Underwriters shoulder enormous risk, and every year the pool pays out.”
Outlook: Cautious Optimism
Will premiums plunge overnight? Unlikely. Reinsurers are still recovering capital and will deploy it selectively. Yet the trajectory is encouraging: steadier pricing abroad filters through to lower costs at home, competition heats up, and consumers should see relief—especially if they seize the moment to right-size their policies.
For the Jamaican insurance market, the message is clear: the storm may not be over, but the skies are brightening.
