Willis has designed and placed cover for Gina Rinehart’s huge Roy Hill iron ore project in WA’s Pilbara region, with the loss trigger based on cyclones and heavy rainfall.

Endurance Global Weather is underwriter for the deal, which has a total limit of $56 million.

It covers two cyclone seasons and responds to defined cyclones and rainfall measured by three Bureau of Meteorology stations during construction of the mine in the cyclone-prone region.

Willis’ Perth-based Business Development Manager Norm Trethewey says the index-based cover differs from regular indemnity cover because the insured is not required to prove loss or damage to assets.

“It is designed to compensate Roy Hill against further increases in costs that are not picked up by traditional construction insurance,” he told insuranceNEWS.com.au.

If a cyclone is heading for the region costs will rise if workers are evacuated to Perth and heavy rainfall delays resumption of work.

Roy Hill’s funders require it to have contingency funds for this, and Mr Trethewey says insurance means the contingency reserve can be reduced.

The transaction has received considerable attention abroad, and he says it has further applications across northern Australia, although every deal must be tailored to the risk.

“There are many other applications for this type of solution but they are always bespoke, each and every one I’ve worked on is slightly different and tailored to the client’s geographic area and exposure.”

The mine is due to ship its first ore in 2015.