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Parametric wind insurance can protect brokers’ clients

Parametric insurance? What’s that?

Unlike traditional indemnity insurance, which compensates policyholders for loss, parametric insurance pays claims based on event triggers.

It’s not designed to replace traditional insurance, such as home, business, strata or farm coverage, but to complement it.

Redicova is a parametric wind insurance that provides an agreed lump sum payment that is triggered when the Bureau of Meteorology (BoM) declares a severe tropical cyclone which passes over an insured’s address.

Redicova is available for properties in northern Australia along the coastline and up to 300km inland in postcode zones between Carnarvon in WA (postcode 6701) to Bundaberg in Queensland (4670) including the Northern Territory.

Redicova will usually pay clients’ sums insured within three business days of them lodging a claim, regardless of any other insurances they have. That provides brokers’ clients with fast disaster recovery cash to help them when they need it most.

Parametric insurance can fill gaps in coverage by traditional insurance policies that have sub-limits, deductibles and exclusions.

Cyclone insurance is expensive in cyclone-prone regions and that’s why Redicova founder Karen Hardy designed a parametric product that’s backed by Lloyd’s.

Karen lives and works in Tully in north Queensland, so she knows first hand the damage and despair a severe tropical cyclone can bring.

Parametric insurance is based on an agreed event occurring, not any material damage it causes, so there’s no need for a loss adjuster to assess damage.

If the BoM declares a category 3, 4 or 5 severe tropical cyclone that passes over an insured’s address, that’s the only trigger required to generate a payout. Redicova will automatically email all insureds to notify them that they’re eligible for a payment.

Insureds then login to the Redicova portal to check their bank account details are correct and submit their claim.

Redicova pays 100% of the sum insured to policyholders affected by ‘very destructive winds’ and 30% to policyholders within a 5km buffer zone around the ‘very destructive winds’ zone.

Redicova is not a replacement for traditional insurance, but can provide a buffer for brokers’ clients, particularly if they are impacted by a cyclone but suffer no physical damage to their premises. Without physical damage, business interruption insurance will not apply.

Consider using Redicova to reduce clients’ other insurance premiums by increasing their excess under those policies. For example, a client could increase their cyclone excess under a building insurance policy to $5,000 to reduce the premium and buy Redicova with a sum insured of $5,000 to pay the excess if a severe tropical cyclone occurs.