Jamaica’s property insurance market is broken in a way that hurts insurers and policyholders alike. The regulator can fix it — but only before the next storm, not after.

Seven months after Hurricane Melissa drove a Category 5 wall of wind and water across western Jamaica, a quieter disaster is still unfolding inside the claims departments. Melissa struck with 185-mile-an-hour winds — tied for the strongest hurricane landfall ever recorded in the Atlantic basin — damaging more than 120,000 buildings and causing total losses now estimated at US$12.2 billion, more than half of the country’s gross domestic product (GDP). These numbers are staggering. But the number that should worry every property owner on this island is a smaller, stranger one.

According to the Insurance Association of Jamaica, an estimated 95 per cent of insured properties are underinsured. One insurance company has said that seven of every 10 Melissa claims it received were underinsured. Read that again — not seven in 10 uninsured homes — seven in 10 insured ones. These are people who did everything they were told to do. They bought a policy. They paid their premiums, often for decades. And when the roof came off, they discovered that the protection they thought they had purchased was, in part, an illusion.

The mechanism that does this is called the condition of average, and it is perfectly legal. When a property is insured for less than its full replacement value, the insurer reduces the payout in the same proportion. A building worth $100 million but insured for $50 million is, in the eyes of the policy, 50 per cent insured — so a total loss pays $25 million, not $50 million. The owner is left to find the rest. The cruelty of it is in the timing: Nobody discovers they are underinsured at the point of sale, when premiums are collected. They discover it at the point of loss, when their home or business is already gone and there is nothing left to do about it.

This is not a story about dishonest insurers. The clause is standard, it is disclosed somewhere in the fine print, and the industry is not breaking the law by applying it. It is a story about a market structure that quietly fails everyone in it.

Here is why. The sum insured on a property policy is, in most cases, a number the policyholder chose — often years ago, frequently on the cheap, and almost never revisited. Construction costs have since climbed. The Jamaican dollar has weakened. A figure that was roughly accurate in 2018 is wildly inadequate in 2026. Nobody is required to fix it. The insurer is content to collect premium on whatever sum is declared, because the average clause protects the company at claim time, regardless. The policyholder is content because the premium is lower. Both parties are, in effect, agreeing to a fiction — and the fiction holds right up until a hurricane turns it into a financial catastrophe.

That is a market failure, and it is precisely the kind of failure a regulator exists to correct.

We already know the fix, because we already use it elsewhere. Consider motor insurance. No one writes a comprehensive policy on a vehicle by asking the owner to guess what the car is worth and then collect premium on the guess. The value is assessed against a known standard, it is documented and it is revisited. The system is built so that the question of value is settled before a collision, not litigated after one. The result is that motor claims, for all their frustrations, rarely collapse into the kind of averaging dispute that is now playing out across the property market.

There is no good reason property insurance cannot work the same way. The Financial Services Commission (FSC) should require, by rule, that property policies above a defined value be supported by a certified professional valuation on a fixed schedule — for example, a full valuation at inception with a refreshed valuation every three years or at a defined renewal cycle. The sum insured would have to track the certified replacement cost. Underinsurance would be flagged and corrected up front, in writing, while there is still time to do something about it — not unearthed in the wreckage afterwards.

None of this requires forcing anyone to insure to the last dollar. A homeowner who can only afford to cover 70 per cent of replacement value should be free to do exactly that. The reform is not about the level of cover — it is about certainty. If a policyholder chooses to insure to a fixed percentage of a certified value, that percentage should be written into the policy and honoured at claim time so that a loss pays out that agreed proportion, full stop.

What must end is the present arrangement in which the proportion is never fixed at all. It floats — recalculated after the disaster against a fresh valuation the policyholder never saw, almost always to his/her detriment. Let people choose their level of cover with open eyes, lock it into the contract, and know exactly where they stand before the storm rather than after it.

The objection writes itself: Valuations cost money; they do. But a professional valuation costs a tiny fraction of a single year’s premium and a vanishing fraction of the loss a homeowner absorbs when they learn, too late, that they were covered for half of what they needed. The choice is not between paying for a valuation and paying nothing. It is between a small, predictable, scheduled cost and an enormous, unpredictable one borne entirely at the worst possible moment.

What makes this reform unusual is that it protects both sides of the contract. Policyholders get what they think they are paying for: a payout that actually rebuilds the house. But insurers benefit too. They collect premium adequate to the true risk on their books rather than the understated risk. They face fewer bitter disputes, fewer regulatory complaints, and far less of the reputational damage now accumulating across the industry as story after story of disappointed claimants reaches the public.

A market in which customers trust that “insured” means insured is a larger, healthier, more profitable market than one in which they suspect, correctly, in my opinion, that the fine print is rigged against them. The averaging trap is a short-term shield for insurers and a long-term solvent of the entire market’s credibility.

The FSC has the mandate. Its own Market Conduct Rules already require insurers to deal with customers fairly and settle claims without undue delay. A valuation schedule is the natural extension of this principle — moving the fairness upstream, to the moment of sale, where it can actually prevent harm rather than merely apologise for it.

The one thing that cannot work is the current approach: Wait for the next storm, watch the same scenes repeat, and convene the same panels to express the same concern. Melissa was not a freak event that will not recur. It was a preview. The science is unambiguous that storms of this intensity will become more frequent, and Jamaica sits directly in their path. The window to fix how we value and insure property is the calm between events — and we are in that window right now.

We should not need another hurricane to teach us a lesson Melissa already taught — at a cost of US$12 billion — people who thought they were covered. Fix the valuation rules before the wind comes. After it arrives, it is too late for everyone.

Calls are being made for members of the insurance industry to revisit how they value and insure property.

Andrew Houston Moncure is the managing director of Bluefields Bay Villas and Suites in Westmoreland and a property policyholder with a Hurricane Melissa claim still in progress.

Andrew Houston Moncure