SEVEN out of every 10 Hurricane Melissa claims received by General Accident were underinsured, suggesting that many homeowners and businesses may ultimately have to absorb a sizeable portion of property losses as they rebuild.

The disclosure by General Accident Group CEO Sharon Donaldson-Levine adds a new dimension to the recovery effort now under way across western Jamaica. While much of the conversation since Melissa has centred on delayed claims and settlement timelines, insurers are now pointing to underinsurance as another factor affecting how much some policyholders ultimately receive.

“In paying the Hurricane Melissa claims, I would say we have seen 70 per cent underinsurance,” Donaldson-Levine said, during a Mayberry Investments briefing recently.

The finding also lends weight to concerns raised earlier this month by Montego Bay Chamber of Commerce President Jason Russell, who argued that many policyholders only discover the limitations of their coverage when they attempt to make a claim.

“A lot think that they are covered for the full value of their property, and that if something were to happen tomorrow that they would be compensated and that a lot of time is just not true,” Russell told the Jamaica Observer.

For insurers, the problem often starts with a property whose insured value has not kept pace with reality.

A homeowner may have insured a house for the amount required when a mortgage was first approved years ago. Since then, construction costs, labour rates and material prices may have climbed sharply, but the sum insured remains unchanged.

Donaldson-Levine pointed to situations where homeowners insured properties for the value required by their mortgage but never adjusted their coverage despite rising replacement costs.

“They have never increased the sums insured, even though we would have sent out renewal notices that says that you need to increase your sum insured, but they’re ignored until there’s a catastrophe,” she said.

When a property is underinsured, insurers can apply what is known as the average clause. The provision reduces the claim payment in proportion to the extent of the underinsurance.

The effect can be significant.

A property worth $40 million but insured for only $16 million would be covered for just 40 per cent of its replacement value. If that property suffered $4 million in damage, the insurance payout could be reduced to about $1.6 million, leaving the owner responsible for the balance.

The issue may help explain why some policyholders have been dissatisfied with claim outcomes following Melissa, even where claims have been approved.

It also comes against the backdrop of one of the largest insurance events in Jamaica’s history.

A week after the storm, Verisk’s Extreme Event Solutions estimated insured property losses in Jamaica could range from US$2.2 billion to US$4.2 billion.

Meanwhile, data from the Financial Services Commission show insurance service expenses surged by 223 per cent, or approximately $97 billion, in 2025, driven largely by Hurricane Melissa claims.

Those costs were partly offset by net reinsurance recoveries of $48.3 billion, helping insurers absorb a substantial share of the losses.

For businesses, the challenges extend beyond physical damage.

Donaldson-Levine noted that business interruption claims, which compensate companies for lost income while they are unable to operate, are proving particularly complex.

“You would have insured for the profits that you would have lost for the time that you cannot trade and that is a complicated calculation that needs to be done by people out of the United States of America. The business interruption claim will drag on for a while before they can actually be settled,” she said.

She also pointed to delays caused by the time it takes policyholders to obtain estimates and by a shortage of loss adjusters available to assess damage and quantify losses.

Despite the challenges, Donaldson-Levine believes Melissa could ultimately encourage more property owners to review their coverage and ensure their sums insured reflect current replacement values.

“I think in a catastrophe year, particularly 2026, you will see significant growth again because a catastrophe reminds everyone, ‘here is my greatest asset and I really should have insured it’,” she said.