Lloyd’s, the world’s leading marketplace for commercial, corporate and specialty risk solutions, has today launched the first retail parametric cyclone insurance product in Northern Australia.
The new solution, ‘Redicova’ (pronounced ‘ready cover’), is supported by the Lloyd’s Disaster Risk Facility (DRF), an initiative designed to help build resilience by closing vulnerable protection gaps around the world. The new product is led by Beazley with initial reinsurance support from AXA XL, Hiscox and RenaissanceRe who are all members of the DRF at Lloyd’s.
Redicova is a parametric product which provides pay-outs in relation to windspeeds from a severe tropical cyclone. Parametric products make pay-outs based on indices rather than indemnifying the actual loss incurred. Redicova is an autonomous product which will quickly pay claims that are triggered without the need for physical assessment.
The innovative retail solution provides fast financial relief to impacted communities to assist their recovery after natural disasters. Developed around the risks faced by customers in Northern Australia, the severe tropical cyclone product brings the protection gap between economic and insured losses closer together. This will help all citizens in the region including individuals, small to medium businesses and agricultural enterprises.
Redicova uses sophisticated track maps, which follow cyclones and plots their journey when they reach and continue over land. Pay-outs are based on these track maps making use of underlying data from the Australian Bureau of Meteorology. The data is provided in collaboration with Jeremy Benn Pacific, part of JBA Group, a global science and engineering firm, who work on the world’s toughest weather-related problems.
Chris Mackinnon, Lloyd’s Regional Head of Australia & New Zealand, said: “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. Redicova will provide fast support for local communities and businesses in Northern Australia who are impacted by severe tropical cyclones.”
Karen Hardy, Redicova Managing Director, said: ‘It’s a privilege to work with Lloyd’s, Tysers, Beazley and others to deliver Redicova to Northern Australia. Redicova will provide fast disaster recovery cash to communities after a severe tropical cyclone, enabling resilience, so they can get on with life.”
Alex Hardy, Head of Property Covers, Beazley said: “Our support for this new parametric cyclone product in Australia demonstrates Beazley’s commitment to providing new and responsive solutions to customers who could be adversely impacted by climate change. The application of data and insurance insight to create an insurance solution that responds quickly and efficiently at the point of a loss is a great example of taking an innovative and client-centric approach to risk mitigation to help support clients at the time when they need us most.”