Building resilience to withstand high disaster risks
Prolonged exposure to natural hazards has long shaped life and economic development in the Caribbean. Located along the main hurricane tracks of the tropical North Atlantic, the region is among the most disaster-prone in the world. Tropical cyclones dominate the risk landscape, while several island states such as Haiti, the Dominican Republic, Puerto Rico, Jamaica, and others are also highly vulnerable to earthquakes. And the threat from hurricanes is even rising as climate change is pushing more storms into the particularly intense categories.
A region shaped by natural hazards and unequal protection
This unique combination of hazards in many of the states intersects with limited fiscal capacity, amplifying vulnerabilities.
From 1980 through 2025, natural disasters in the Caribbean (and Bermuda) have destroyed assets valued at approximately US$ 270bn. Of this, only about US$ 80bn was covered by insurance - reflecting a substantial protection gap of around 71%. While the last decade has seen some improvement, with the insurance gap narrowing to about 60%, this progress is uneven across the region.
Higher insurance coverage is concentrated in wealthier areas such as the Bahamas or Puerto Rico, which benefit from international corporate presence and greater insurance uptake. Conversely, less wealthy nations including Cuba and Haiti face natural catastrophe protections gaps nearing 100%. Limited financial means constrain both prevention efforts and recovery, leaving populations highly exposed and, in many cases, dependent on international aid for disaster recovery.
Climate change as a risk multiplier
Some major catastrophes have left indelible marks on the Caribbean. The 2010 Haiti earthquake remains the deadliest event in the region since 1980, claiming nearly 160,000 lives. Hurricane Irma (2017), which struck shortly before Maria, is also strongly anchored in public memory due to its severe impacts across several islands including Puerto Rico. Events such as Hurricane Melissa, one of the strongest hurricanes on record, striking Jamaica in 2025 further illustrate the region’s repeated exposure to tropical storms. Economically, Hurricane Maria (2017) stands as the costliest disaster, causing total losses across numerous Caribbean countries of around US$ 86.8bn, of which about US$ 35.6bn were insured. Puerto Rico suffered the full brunt of the storm, disrupting major pharmaceutical manufacturing and integrated global supply chains, and paralyzing infrastructure for prolonged periods.
Hurricane Melissa in 2025 is an example of the enormous natural disaster risk in the Caribbean. Melissa was one of the strongest hurricanes ever to make landfall. Fortunately, many people in Jamaica were evacuated before it hit land. Nevertheless, around 100 people lost their lives. Only around a third of the devastating damage in Jamaica, amounting to some US$ 10bn, was insured.
Though climate change does not introduce new weather hazards to the Caribbean, it can and does intensify many of those already present. While most scientific studies indicate that the number of tropical storms will remain virtually unchanged in most ocean regions until the end of the 21st century, the share of major hurricanes (categories 4 and 5 on the Saffir-Simpson scale) is set to rise. Increasing occurrences of storms with extreme rainfall and rapid intensification challenge forecasting and emergency preparedness. Additional impacts include more extremely hot summers, shorter rainy seasons, and rising sea levels resulting in elevated storm surge risks - consolidating a rising risk profile for the region.
Melissa fits the pattern expected as a result of climate change: the proportion of particularly severe storms is increasing. And cyclones are increasingly intensifying into very powerful monster storms within a very short time, as was the case with Melissa. Experts refer to this as ‘rapid intensification.’
From losses to resilience: Insurance as a core element
As risks are increasing, their impact goes beyond physical destruction to tangible assets. Insufficient insurance coverage transfers the burden to public finances, hampers economic recovery, and exacerbates social inequality. For households and enterprises alike, repeated shocks threaten long-term development and resilience. Strengthening prevention measures and boosting insurance penetration are paramount to strengthen resilience of economies and people alike.
“A higher proportion of insurance cover can help to better manage the financial losses from natural disasters. Munich Re stands ready, with its expertise and financial strength, to help strengthen the resilience of Caribbean countries through risk capacity and alternative protection concepts such as parametric insurance solutions.” – Frank Buchsteiner
The Caribbean Catastrophe Risk Insurance Facility (CCRIF), established in 2007 with Munich Re’s support, exemplifies innovative regional cooperation. Offering parametric insurance for tropical cyclones, earthquakes, and excess rainfall, CCRIF has issued 82 payouts totalling approximately US$ 483m, typically within 14 days of an event. Munich Re remains a key reinsurer, providing expertise and capacity to strengthen this vital safety net.
By integrating greater prevention measures, innovative insurance solutions, and international collaboration, the region can significantly enhance its resilience, enabling society to better cope with such extremes, recover faster, and preserve development progress amid accelerating climate change.
Source: Munich Re, NatCatSERVICE, April 2026 Losses inflation-adjusted via country-specific consumer price index and consideration of exchange rate fluctuations between local currency and US$ . Munich Re's NatCatSERVICE is a global database containing loss data from 1980 onward for all types of natural disasters, excluding drought and heatwaves.Experts
