North Queensland underwriting agency Redicova has reminded brokers of the benefits of parametric insurance in helping households and business recover from cyclone impacts, as the Bureau of Meteorology forecasts an above-average season.

Parametric products pay claims based on event triggers, allowing a rapid release of funds, unlike traditional indemnity cover that compensates policyholders for assessed losses.

Redicova, which launched its Lloyd’s-backed product last year, pays an agreed lump sum that is triggered when the Bureau of Meteorology declares a severe tropical cyclone that passes over an insured’s address. Payment is made within three business days of receiving a claim.

“It’s not designed to replace traditional insurance, such as home, business, strata or farm coverage, but to complement it,” MD Karen Hardy says. “We specialise in uninsurable risks like crops and economic loss. We are not property insurers.”

The Bureau of Meteorology says Australia has a 73% chance of having more tropical cyclones than average this season, which runs from November 1 to April 30, partly reflecting the influence of the Pacific Ocean La Nina.

Ms Hardy says Redicover pays 100% if the insured is in the path of very destructive winds and 30% to those within a 5km buffer zone, with cover starting from $1000.