Jamaica’s once flourishing tourism sector is struggling to regain its footing nearly a year after Hurricane Melissa slammed into the island as a Category 5 storm KINGSTON, Jamaica -- Jamaica’s once flourishing tourism sector is struggling to regain its footing nearly a year after Hurricane Melissa slammed into the island as a Category 5 storm. High deductibles and delays in insurance claim settlements mean that hotels and other businesses are running out of operating capital as Jamaica’s peak winter travel season approaches. An estimated 20 hotels remain closed nearly a year after Melissa hit, killing dozens of people and causing an estimated $12 billion in damage, much of it in the island’s northwest region.
Tourism represents up to 35% of Jamaica’s GDP. It also accounts for more than half of the country’s total foreign exchange earnings and employs roughly one in four workers when indirect jobs are factored in. The greatest hurdle to full recovery of the tourism sector isn’t the availability of construction materials or labor; it’s a mounting insurance crisis characterized by severe payout delays, massive deductions and a crippling cash shortfall.
According to the association, more than 61% of claimants are awaiting full settlements, leaving operators struggling to finance their own rebuilding efforts. More than eight in 10 association members submitted a property or business interruption claim after the hurricane, underscoring the widespread impact on the sector. Despite the insurance industry’s public commitment to resolve the bulk of non-litigated claims by the end of September, this has not happened.
Damages from the hurricane are the equivalent of roughly 57% of Jamaica’s GDP, and the physical and economic scars of the storm are profound. Commercial claims filed by Jamaica’s hospitality sector make up the bulk of the island’s projected $2.2 billion to $4.2 billion in total private insured losses. The disruption to room stock caused a 17% drop in visitor arrivals and an 18% drop in tourism revenue, costing the country roughly $550 million in lost earnings.
Tourism stakeholders argue that the problem is how claims are being processed and undervalued. According to Jamaica’s Hotel and Tourism Association, seven in 10 claimants reported facing deductions that exceed what they understood their policies allowed under the controversial “average clause” — a provision that penalizes policyholders if a property is deemed underinsured. For nearly a third of claimants, these deductions have slashed the value of their claims by more than 40%.
Insurers have blamed the delays on the complex nature of commercial hotel claims and a severe shortage of licensed property adjusters in Jamaica. They point out that fewer than half the number of loss adjusters registered with the Financial Services Commission are licensed to handle property claims, leading to a severe backlog. Furthermore, calculating lost revenue from closed resorts for business interruption claims can take months.
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