Protecting what matters most

Australia faced six weather catastrophe events in 2021 that cost AUD$2.16 billion in insured losses, but it’s far more than the impact on a balance sheet. When you talk about a catastrophic weather event in Australia, people can tell you a lot about the real impact – lost income, lost homes and memories, lost dignity whilst you wait for state aid – which all adds up to devasted lives. Redicova offers customers an alternative to the traditional loss assessment model, using a parametric solution to speed up much needed funds to start the process of recovery, backed by Lloyd’s.

Chris MacKinnon, Head of Lloyd’s Australia and New Zealand, met Karen Hardy from Redicova in Lloyd’s, after a 9,465 mile journey from North Queensland, Australia to London. He explains how her concept and sheer determination to make it happen impressed the market and found her the backing to turn it into reality.

“Karen’s idea was simple – brilliant ones often are. Parametric measurement of windspeeds means that it’s possible to fix an agreed insurance pay out if windspeeds reach the velocities that cause damage. This gives customers an immediate injection of cash after a cyclone event, so they have the emergency funds to start building back their lives.

Karen is an insurance broker who, in early 2011, saw first-hand the impact of Severe Tropical Cyclone Yasi on her neighbours in Tully. She also saw a potential solution to the anxious wait for a loss adjuster to visit your home and assess the damage that could take weeks if not months when damage is widespread and severe. 

Karen applied for the 2017 Valerie Baker Memorial Award, which recognises professional excellence in the general insurance intermediary sector. Winning first prize meant she was given a plane ticket to London, access to the Lloyd’s Global Development Centre Worldwide Program, and introductions to meet and lobby the market to find capacity for her idea. 

Her determination impressed everyone, not least of all me, but there were plenty of bumps in the road from idea to launch; from the Australian regulatory environment which was very complex at the time, to the gaps in the Australian Bureau of Meteorology’s data for the Queensland area that was essential to make the product feasible. 

Meeting Beazley in the Disaster Risk Facility (DRF) was the turning point. The DRF was formed to look at closing insurance gaps around the world through development and delivery of risk financing solutions to mitigate the impact of natural catastrophes. Her idea wasn’t typical of the work the DRF supports, more usually in emerging economies, but because it was such a community-based solution, created by someone in the community, it felt appropriate. And although the product was designed specifically for cyclones, its principles could be applied to other natural catastrophic events, like flooding and bush fires.

Beazley backed her idea, stepped up as the lead insurer and provided the capacity that would encourage other DRF members to also support development and roll out. The final hurdle, securing approval as a Lloyd’s coverholder, was passed in late 2021. Redicova is the first and only mainstream retail parametric wind product in Australia, with a fully automated process that can send payments to customers within hours of an event.

I’m delighted that Karen got the backing her idea deserved from Lloyd’s. This is why we’re all in the industry and what we’re here for”.

Find out more about Redicova.