A safe haven

Limited insurance coverage only dark cloud on otherwise sunny horizon for Caribbean

Of the 10 most tourism-dependent countries globally in terms of GDP contribution, six are Caribbean nations. Seven Caribbean nations feature in the top 10 for the direct contribution of tourism to employment figures*.  

Simply put: the Caribbean is the most tourism dependent region in the world.

This resilient region has weathered the heaviest of storms. Natural disasters, economic shocks and even a global pandemic have been unable to shake confidence among investors considering the potential for healthy returns on Caribbean investment. And investors continue to ride that wave of optimism.

Baker Tilly’s annual Caribbean Hospitality Financing Survey showed that in 2023 the confidence level of banks in the Caribbean tourism industry reached its highest level since our survey started in 2009. Confidence among non-banks also remained high.

*Source: 2022 World Travel & Tourism Council (WTTC) report

There’s no mystery behind the Caribbean’s appeal. With year-round sunshine, turquoise seas and a laid-back lifestyle, it’s a destination that’s hard to resist. 

And despite global turbulence, the Caribbean held its course in 2024 — reinforcing its role as a leading destination for travel and investment and setting the stage for continued, albeit modest, growth in 2025. 

Now in its 20th year, Baker Tilly’s annual Caribbean Hospitality Financing Survey shows that confidence in the region remains robust. While bank confidence dipped slightly from 2023’s record highs, it’s still in line with the ten-year average. Non-bank confidence, meanwhile, edged up compared to last year.

One standout? Real estate. The boom shows no signs of slowing down — 86% of banks believe it will continue for at least another 12 months, if not significantly longer. 

Real estate booms come and go — but the current surge is both unusually strong and sustained.  

It points to a deeper, more lasting shift in the post-COVID tourism landscape — one that’s reshaping not only who’s coming to the Caribbean, but how new developments are being financed to meet evolving demand. 

But is it all plain sailing for Caribbean tourism?

Cautious optimism  

“2024 was anything but quiet on the geopolitical front,” says Gary Brough, Managing Director at Baker Tilly (Turks & Caicos).  

“From unrest in Europe and the Middle East to a wave of high-stakes elections around the globe, uncertainty was high.  

“Yet reassuringly, most respondents to our annual survey felt these events had little impact on Caribbean tourism. In fact, the region continues to be viewed as a safe and dependable destination.” 

Most banks across the region remain upbeat. 

“Many report a stronger pipeline than last year, with increased transaction activity and improved performance among their tourism clients over the past 12 months,” says Mr Brough. 

The appetite to finance tourism projects remains solid, with lending terms largely unchanged. There are clear reasons for optimism — but it’s not all positive news. 

One persistent challenge? Insurance. 

Securing adequate coverage at a reasonable cost remains difficult — and in some cases, impossible. This continues to complicate financing efforts and remains a key concern for both developers and lenders.

Stormy coverage 

“Last year, insurance challenges topped the agenda — and not much has changed”, explains Mr Brough. 

“Back then, we flagged not just the soaring cost of coverage, but the growing difficulty of getting insured at all. With limited capacity allocated to the region and heightened concerns around hurricane activity and climate change, insurers remained cautious.  

“Without coverage, developers struggled to secure financing, and banks were left choosing between changing their normal mandates or walking away from promising opportunities.” 

So, has anything improved this year? Not exactly, says Mr Brough — and especially not the weather. 

The 2024 hurricane season was both long and intense, beginning in June with Hurricane Beryl — the earliest Category 4 and Category 5 Atlantic hurricane ever recorded.  

October brought three hurricanes at once, marking the first post-September trio of active Atlantic hurricanes. Milton, the fastest-intensifying hurricane on record, left a trail of destruction across Florida. The estimated total cost topped US$180 billion. 

“Last year, one-third of banks called availability of insurance a really big issue. This year, that number dropped to 14% — but 86% still say insurance is a key consideration when lending,” says Mr Brough.  

“Among non-banks, 85% flagged insurance access as a challenge, with more than half calling it a major issue.” 

The fallout is clear. 

42% of banks have turned away business due to insurance limitations. 29% have relaxed their usual insurance requirements. The remaining 29% say it’s business as usual. 

The ripple effect 

Less than three weeks after we closed this year’s survey, the US government announced a fresh wave of tariffs on a wide range of imported goods. 

“It would, of course, be naïve not to acknowledge that our survey responses might have looked quite different had we asked them after 2 April,” notes Mr Brough. 

“At the time of writing the report, Goldman Sachs put the odds of a recession at 45% and JP Morgan at 60%. 

“Higher import costs — particularly for construction materials and consumer goods —could put pressure on tourism development and drive up the cost of doing business across the Caribbean. 

“In an industry that depends on accessibility and value, even indirect economic shocks can impact visitor numbers, investor confidence and project timelines.  

“What that looks like in practice, we’ll have to wait and see. 

“However, what our report shows is that, heading into this period of uncertainty, the fundamentals of the Caribbean’s tourism industry were strong, backed by an underlying sentiment of cautious optimism.