So, it's betting not on the outcome, but specifics of the event. The analogy could be sports betting where you bet on a player making a particular individual score, not just the win/loss.

At the end of the day, if it prevents bankrupting companies, countries and the insurers when an event occurs then it is a good thing.

I know of a Australian-based insurer that only operates in the far North primarily for residents who can't get reasonable premiums to cover for floods and cyclones from the major insurers. They reinsure with a global company so paying out an event in Australia is offset with no events elsewhere.

Interestingly the frequency of cyclones is decreasing, but the strength is projected to increase with "global warming": Higher water temperature = more energy. So betting on the strength makes sense.