A parametric earthquake insurance product backed by Lloyd’s and other industry players has been launched in quake-prone New Zealand.

Bounce, developed by a New Zealand start-up with the same name, also has the support of Guy Carpenter, Marsh and US-based Jumpstart Insurance.

The product aims to provide customers with affordable earthquake insurance and fast claims payments within five days of a strong quake. It works by tracking Peak Ground Velocity, a measurement of quake intensity. Payments will be triggered when a reading of 20cm per second and above is detected, which is the equivalent of a “severe” seismic tremor.

Claims are based on the strength of any earthquake, with payments based on “steps”. This means that the stronger the earthquake, the more is paid out.

Lloyd’s says the new offering reflects its commitment to remove product complexity and provide enhanced coverage plus clarity to customers through simpler risk solutions.

“Lloyd’s has a long and proud history supporting New Zealand by insuring some of its greatest assets and innovations, through to some of the most destructive earthquakes this impressively resilient nation has withstood, particularly over the last decade,” CEO John Neal said.

“We’re thrilled to be able to step up and provide a technologically sophisticated and innovative earthquake insurance product, Bounce, which will provide customers with much needed support and financial resilience in the immediate aftermath of an earthquake.”

Bounce founder and CEO Paul Barton says the offering will give households and businesses confidence that they will have some form of financial support to begin their recovery plans if they are caught up in a severe quake event.

The product is available to individuals, households, and small and medium sized businesses, he said.

“We will be predominantly leveraging a direct to consumer distribution model via our website,” Mr Barton told insuranceNEWS.com.au. “However where it makes sense, we are also exploring broker distribution arrangements, particularly to support small and medium sized businesses interested in this type of cover.”