Hurricane Season Opens 2024: Caribbean Insurance Under Pressure as Spring Tourism Closes Strong

Publication Date: 3 June 2024  |  Coverage Period: 3 May – 2 June 2024

Morning Briefing

• The 2024 Atlantic hurricane season opens on 1 June with NOAA projecting an above-normal season driven by record-high Atlantic sea surface temperatures, raising immediate concern among Caribbean property owners and their insurers about the coming months.
• Caribbean property insurance premiums have risen by an estimated average of 15-20% at May renewals compared with 2023, with reinsurance market tightening following recent active seasons cited as the primary driver.
• Jamaica’s tourism sector confirms its strongest April-May performance on record, with stayover arrivals for the two-month period up 9.3% year-on-year and gross visitor expenditure tracking well above 2023 levels.
• The Dominican Republic’s Citizenship by Investment programme recorded its highest-ever monthly application volume in May 2024, reflecting continued strong interest from European, North American, and Latin American investors.
• St Kitts and Nevis confirms that its Citizenship by Investment programme has resumed full processing following a temporary pause for programme review, with new due diligence requirements now in effect and application volumes recovering steadily.
• New hotel development projects announced in May for Antigua, St Lucia, and the Turks and Caicos Islands confirm continued institutional confidence in Caribbean hospitality investment despite the uncertain insurance environment entering hurricane season.

Hurricane Season 2024: NOAA’s Warning and the Caribbean’s Elevated Risk Environment

The formal opening of the 2024 Atlantic hurricane season on 1 June brings with it a level of pre-season anxiety that is notably higher than in recent years. NOAA’s seasonal forecast, released in late May, projects an above-normal season with a high probability of an exceptionally active period. The scientific basis for this elevated forecast is compelling and rooted in the extraordinary oceanographic conditions prevailing in the Atlantic: sea surface temperatures in the main hurricane development region — the tropical Atlantic between the West African coast and the Caribbean — are running at record-breaking levels, several degrees above the long-term average, and the absence of an El Niño signal that would typically provide atmospheric wind shear to suppress hurricane development means that conditions are highly favourable for storm intensification.

For Caribbean property owners and investors, the NOAA forecast is not merely of meteorological interest — it is an immediate financial and risk management concern. The coming months will determine whether the Caribbean property market navigates another year without a catastrophic landfalling storm, or whether the region faces the kind of hurricane event that triggers widespread property damage, insurance claims, and the difficult post-disaster economic dynamics that reshape markets for years afterward. The memory of Irma and Maria in 2017, which devastated the US and British Virgin Islands, Puerto Rico, and parts of the Eastern Caribbean, remains vivid for anyone who was invested in Caribbean property during that season.

Property owners across the Caribbean are being strongly advised by insurance brokers, property managers, and risk consultants to conduct thorough pre-season reviews of their coverage. This means confirming that insured values reflect current replacement costs — which have risen significantly due to construction cost inflation since most policies were originally placed — and checking that wind, flood, and business interruption coverage is adequate for the properties’ actual exposure. The consequences of discovering underinsurance after a storm strikes are severe, and the pre-season window is the appropriate moment to address any gaps.

Caribbean Property Insurance: A Market Under Structural Stress

The Caribbean property insurance market entering the 2024 season is one that is under considerable structural stress. The average premium increase of 15-20% at May renewals — following similar increases in recent years — reflects a global reinsurance market that is progressively repricing its exposure to climate risk in regions where that risk is escalating. Caribbean reinsurance capacity, which provides the ultimate financial backing for the primary insurance policies that Caribbean property owners hold, has been tightening since the losses of 2017, with each subsequent active Atlantic season adding to the cumulative loss burden that reinsurers are absorbing.

The practical consequences of this reinsurance market tightening are felt most acutely by the primary insurers operating in smaller Caribbean territories, where the scale of the local market limits their ability to absorb losses independently. Insurers in the Eastern Caribbean are facing the challenge of maintaining affordable coverage for their policyholders while simultaneously managing the rising cost of the reinsurance protection that enables them to pay large claims. Some insurers have responded by restricting coverage terms, increasing deductibles, or declining to renew policies in the highest-risk locations. The cumulative effect of these market dynamics is a Caribbean property insurance ecosystem that is becoming more expensive and in some locations more difficult to access.

Governments across the Caribbean are beginning to engage more actively with the insurance adequacy question as a matter of housing policy rather than purely financial regulation. The recognition that widespread residential underinsurance represents a systemic fiscal risk — because governments inevitably bear the cost of rebuilding homes that were inadequately insured when disasters strike — is driving conversations about whether mandatory minimum coverage requirements, subsidised insurance schemes for low-income homeowners, or expanded parametric solutions at the residential level might help address the structural underinsurance problem. These are long-term policy challenges with no easy near-term solutions, but the 2024 season has given them renewed urgency before a single storm has formed.

Spring Tourism Season: Jamaica and the DR Lead a Strong Close

While the insurance market anxiety builds, the Caribbean’s spring tourism season has closed on a decidedly positive note. Jamaica’s confirmation of its strongest-ever April-May performance, with stayover arrivals up 9.3% year-on-year and visitor spending tracking well above 2023, reflects the sustained momentum of the island’s tourism recovery that has been building since 2022. The spring season traditionally serves as a bridge between the winter peak and the summer family travel period, and Jamaica’s success in this window reflects both its improving airlift connections and the broadening appeal of the island to new visitor demographics from the United States, Canada, and the United Kingdom.

The Dominican Republic continues to operate its tourism machine at extraordinary scale, with the country on track for another record annual arrival figure. The DR’s combination of all-inclusive resort infrastructure at competitive price points, strong airlift from multiple US, European, and Latin American source markets, and the marketing muscle of its Tourism Ministry creates a competitive position in Caribbean tourism that no other destination can currently match on volume. The spring data confirm that this position is not eroding: if anything, the DR’s tourism fundamentals are continuing to strengthen as new capacity comes on stream and connectivity expands.

For Caribbean property investors, strong spring tourism data translate directly into healthy short-term rental returns. Occupancy rates across Jamaica, the Dominican Republic, Barbados, and Antigua in April and May have supported rental income that is keeping investment yields at attractive levels relative to the cost of Caribbean property acquisition. The tourism-property market linkage — whereby strong visitor demand sustains rental income which in turn supports property valuations — is functioning well entering the hurricane season, providing a solid base from which the market will need to navigate whatever the coming months bring.

Caribbean Citizenship by Investment: Strong Spring Demand

The Caribbean citizenship by investment (CBI) market has entered 2024 with strong momentum, as evidenced by the Dominican Republic’s record May application volumes and the resumption of full processing in St Kitts and Nevis following the programme’s brief review period. Caribbean CBI programmes — offered by Antigua and Barbuda, Dominica, Grenada, St Kitts and Nevis, and St Lucia, as well as the Permanent Residency by Investment programme in Barbados — remain attractive to a global pool of applicants seeking alternative nationality or residency options, and 2024 appears to be delivering particularly strong demand.

The CBI-property connection is direct and significant: most Caribbean CBI programmes require applicants to purchase approved real estate as the qualifying investment, channelling substantial capital into the Caribbean property market. CBI-qualifying real estate in Grenada, St Kitts, and Antigua typically consists of resort residences and hotel-linked condominium units, and the programmes create a reliable stream of demand for these products that supports developer financing and investor confidence. The strong spring CBI volumes are therefore a positive indicator not just for government revenues but for the investment property market in the participating territories.

St Kitts and Nevis, which overhauled its programme following concerns about due diligence standards, has implemented stricter vetting requirements that are expected to enhance the programme’s long-term credibility even if they temporarily reduced application volumes. The recovery of processing volumes noted in the data confirms that the international investor community has accepted the enhanced standards, and the programme’s renewed credibility positions St Kitts well for the next phase of CBI demand growth.

Hotel Development Pipeline: Institutional Confidence Despite Headwinds

The wave of hotel development announcements in May for Antigua, St Lucia, and the Turks and Caicos Islands provides an important signal that institutional investors and hospitality brands retain confidence in Caribbean hotel investment as a long-term proposition, even as the near-term hurricane season uncertainty weighs on market sentiment. These announcements follow a pattern that has been building throughout 2024 of accelerating commitment to new Caribbean hotel capacity, driven by the recognition that strong tourism demand — which shows no signs of structural weakening — supports attractive returns on well-sited hospitality assets.

The Turks and Caicos Islands have emerged as one of the Caribbean’s most attractive new hotel development destinations, combining the island’s extraordinary natural assets — particularly the world-class beach at Grace Bay — with a stable political environment as a British Overseas Territory and a growing direct airlift from the northeastern United States. Multiple new hotel and resort projects are in various stages of development, and the announcement of further new projects in May confirms that the development community sees the TCI as a market with significant additional growth potential.

St Lucia continues to attract premium hotel investment, with the island’s dramatic landscape and its positioning as a sophisticated eco-tourism and romance destination supporting the development of properties at the top end of the Caribbean hospitality spectrum. New resort development in the Vieux Fort area, near the island’s southern international airport, is gradually extending St Lucia’s tourism geography beyond the traditional Soufriere and Rodney Bay corridors and opening new investment opportunities in parts of the island that have historically been underserved by hospitality infrastructure.

Caribbean Leaders This Month

Strongest Tourism Performance: Jamaica earns this recognition for its strongest-ever April-May spring season, with 9.3% arrival growth year-on-year confirming the island’s position as one of the Caribbean’s most dynamic and diversifying tourism destinations.

Best CBI Programme Momentum: The Dominican Republic, whose CBI programme registered record May application volumes, demonstrates the continued appeal of Caribbean residence and citizenship offerings to international investors and high-net-worth individuals seeking alternative nationality options.

Most Significant Insurance Market Development: The 15-20% average Caribbean property insurance premium increase at May renewals is the most consequential market development for Caribbean property owners entering the 2024 season, with profound implications for investment economics and housing affordability across the region.

Best Programme Credibility Story: St Kitts and Nevis, whose CBI programme has successfully implemented enhanced due diligence standards and is recovering application volumes — demonstrating that the Caribbean CBI industry can reform and strengthen its standards without permanently damaging investor interest.

Strongest Hotel Development Signal: The Turks and Caicos Islands, where multiple new resort project announcements in May confirm the destination’s growing prominence as one of the Caribbean’s most dynamic hotel investment markets.

Most Important Pre-Season Recommendation: Caribbean property owners across the region should conduct comprehensive pre-hurricane-season insurance reviews to confirm that coverage levels reflect current replacement values — the most important preparatory step that property owners can take before the 2024 season develops.

Overall Regional Performer, May 2024: Jamaica earns this recognition for combining record spring tourism performance with continued NHT housing market activity, sustained diaspora property interest, and a macroeconomic backdrop — improving fiscal position, gradual interest rate easing — that is more supportive of property market growth than at any point in the past several years.

Looking Ahead

The Caribbean property market enters June 2024 with a combination of real strength and real vulnerability. The strength is evident in the tourism data, the CBI programme performance, the hotel investment pipeline, and the underlying economic fundamentals that are supporting property demand across the region. The vulnerability is equally real: the NOAA forecast for an above-normal hurricane season, the already-stressed Caribbean insurance market, and the structural underinsurance that persists across much of the Caribbean’s housing stock together constitute a risk profile that the region must take seriously.

For investors, the calculus of Caribbean property in mid-2024 requires an honest assessment of both the opportunity and the risk. The opportunity — strong tourism income, improving financing conditions, lifestyle appeal, and improving fundamentals in key markets — is genuine and well-supported by the data. The risk — above-normal hurricane season, rising insurance costs, and the potential for a major storm event to disrupt income and damage asset values — is equally real and must be priced into investment decisions. The appropriately prepared Caribbean property investor enters this period with adequate insurance, resilient property construction, geographic diversification across territories with different risk profiles, and a long-term investment horizon that can weather the short-term volatility that a major storm event might create.

The months ahead will test Caribbean property markets in ways that cannot be fully predicted from the June 1 vantage point. The season’s outcome depends on meteorological conditions that no forecast can determine with certainty at this stage. What can be said is that the Caribbean’s economic fundamentals entering hurricane season 2024 are broadly sound, that institutional confidence in the region’s long-term potential remains intact, and that the property market’s structural demand drivers — diaspora purchasing, tourism-linked investment, and lifestyle migration — are not going to be switched off by a difficult hurricane season, however challenging that season may prove to be. The Caribbean has weathered storms before, and it will do so again.

The Caribbean Property & Investment Review is published monthly and covers developments during the preceding calendar month. All factual statements reflect information publicly available at the time of publication.