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Simple cyclone parametric cover seen as fast relief option

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Retail parametric cover aimed at Northern Australian enterprises and consumers will help meet a need for a simple option that can deliver fast emergency payments after severe tropical cyclones, provider Redicova says.

Redicova parametric insurance, launched last week, is supported by the Lloyd’s Disaster Risk Facility (DRF), an initiative aimed at closing the protection gap through building resilience against natural disasters.

“Parametrics have been a very complex product with lots of insurance terminology that nobody understands, whereas this is really simple,” MD Karen Hardy told insuranceNEWS.com.au.

Tully-based Ms Hardy says she has seen the need for faster payment of emergency funds after events such as Cyclone Yasi. At the same time traditional capacity has also reduced in Northern Australia amid affordability issues.

“Redicova is not going to be the magic wand that fixes everything, but I hope it helps people get through that initial stage,” she said.

The parametric cover can be purchased in $1000 sum-insured units through the website, with pricing tiered according to location and exposure to cyclones of at least category three strength. Premiums per unit range from $35 to $130 for high-risk areas in the Pilbara.

Lloyd’s broker Tysers gathered support from Disaster Risk Facility syndicate members Beazley, Axa XL, Hiscox and Renaissance Re, together with Hannover Re, INIGO and Agora.

“We’re delighted to provide a new solution at a time where both industry and government are working on issues of affordability and availability of insurance in northern Australia,” Lloyd’s Regional Head of Australia and New Zealand Chris Mackinnon said.

The Redicova website says cover is for financial or economic loss as a result of cyclonic winds, with cover triggered through monitoring of cyclone track maps and Bureau of Meteorology wind strength data.

Those eligible to claim are notified electronically and funds transferred after they respond. Full payment is made when the situation is within the “very destructive wind zone”, while a 30% payment is provided within a 5km buffer.

The Bureau of Meteorology defines “very destructive winds” as events with maximum wind gusts over land of at least 165 km/h.