The day after Hurricane Melissa passed, many Jamaicans walked outside to find a different world. The roofs of their houses were gone. Trees lay across roads. Businesses were shuttered. Some families stood silently in front of homes they had spent years, in some cases decades, building. For many people, the damage was more than physical. It was financial. It was psychological.
A lifetime of savings disappeared in a few terrifying hours. According to an assessment by the Inter-American Development Bank (IDB), the Economic Commission for Latin America and the Caribbean (ECLAC), and The World Bank, Hurricane Melissa caused losses on a scale Jamaica has never seen before, making it one of the costliest disasters in our history.
Yet, the most important lesson from Melissa is not its cost. The lesson is this: What happened once can happen again. And next time, the bill could be even higher.
A new reality
Many Jamaicans grew up believing that the big hurricanes came once in a lifetime. A Charley. A Gilbert. An Ivan. A Sandy. Something people would talk about for decades. But the world is changing. The Melissa report notes that the storm intensified rapidly over exceptionally warm Caribbean waters before striking Jamaica at Category 5 strength. You do not have to be a scientist to understand what that means. Warmer seas fuel more powerful storms. More powerful storms mean greater destruction. Greater destruction means higher costs for families, businesses, and the country.
Climate change is often discussed as if it is somebody else’s problem. A problem for governments, scientists, and international conferences. But climate change is increasingly becoming a kitchen-table issue. It affects where we live. How we build. Where we build.
How much we spend. How much we save. And whether we can recover when disaster strikes.
The risk we talk about and the risk we ignore
Hurricanes get most of the attention in Jamaica. And rightly so. Every year we watch weather reports, track tropical systems and hope that storms pass us by. But there is another danger that receives far less attention: Earthquakes. Unlike hurricanes, earthquakes do not give us several days to prepare. There is no countdown. No satellite image. No warning bulletins. One moment life is normal. The next moment it is not.
Jamaica sits in a seismically active region. That means our national risk is not limited to what emerges from the Atlantic during hurricane season. We face threats from both the sky and the ground beneath our feet. For homeowners and business owners, the result is the same.
Buildings can be damaged. Lives can be disrupted. Savings can vanish.
Disaster after the disaster
Most disasters end in a few hours. The financial consequences can last for years. That is the part we don’t talk about enough. After the floodwaters recede and the roads reopen, reality sets in. The mortgage payment is still due. School fees are still due. Utility bills are still due. Business loans are still due. But the roof may be gone. The fixtures, fittings, and inventory may be ruined. The family car may be damaged. The income that pays the bills may have disappeared. For thousands of families and small businesses this is where the real struggle begins. Not during the storm, but after it. Statistics in the US suggest that up to 90 per cent of businesses fail if they lack contingency plans, adequate cash flow, or property and business interruption insurance.
Questions every family and business should ask
Imagine that a major hurricane or damaging earthquake struck tomorrow. How long could your household/business recover without outside financial help? A week, a month, six months or longer?
Most people avoid thinking about these questions because they are uncomfortable. Melissa reminds us that uncomfortable questions do not disappear because we ignore them. The reality is that many Jamaican families/business owners are financially vulnerable to a major disaster. Not because they are irresponsible. Not because they failed to work hard. But because modern disasters are becoming increasingly more expensive. A family can save for twenty years and lose much of what it has built in a single day.
The protection gap
Insurance professionals have a term for a growing global problem. They call it the ‘protection gap’. In simple language, it means the difference between what people lose and the money available to help them recover. For example, if a family suffers $20 million in losses but has access to only a small fraction of that amount, the remaining burden falls on that family. The Melissa assessment estimates that the losses suffered by households and businesses in the private sector amounted to US$5.4 billion. Only a small part of that amount was covered by insurance. Many people mistakenly assume that recovery funds will somehow appear when disaster strikes. A government programme. A bank loan. Help from relatives overseas. Community support. While all of these can help, none can fully replace a sound recovery plan.
Resilience begins before the storm
Whenever disaster preparedness is discussed, people immediately think about emergency supplies. Batteries. Water. Tinned food and the like. And they are right to do so. But resilience is about much more than surviving the first three days. It is also about surviving the next three months. And sometimes the next three years. That means:
• Strengthening roofs where possible.
• Removing dangerous trees.
• Protecting important documents.
• Maintaining emergency savings.
• Understanding risks.
• Planning.
These actions may never make headlines. But they can make the difference between a temporary setback and a permanent financial crisis.
The choices before us
No Jamaican can prevent hurricanes. No Jamaican can stop an earthquake. But we can decide how prepared we will be when disaster comes. Melissa was more than a weather event. It was a warning. A warning that Jamaica’s risks are growing. A warning that climate-related disasters can inflict enormous economic damage. And a warning that financial recovery is often harder than physical recovery. The next storm may not arrive this year. The next earthquake may not arrive tomorrow. But one thing is certain. Neither will wait until we are ready.
Next week: Why do so many Jamaicans remain uninsured, and what can insurers, regulators and consumers do to narrow the protection gap before the next disaster strikes?
Cedric E. Stephens offers free counsel and independent advice. He does not own shares in any insurance company or intermediary. if you require assistance managing risks or solving insurance problems. To obtain information and counsel, please write to The Business Editor at business@gleanerjm.com or contact Mr Stephens directly at aegisja@gmail.com. Letters and e-mails will be edited for clarity and length.
