Weatherbill: Unique Weather Insurance Lets People Predict And Profit From Mother Nature

You may have heard of weather insurance, which protects businesses when their profits decline due to bad weather. However, Weatherbill is a little bit different from its competition, as an e-commerce website, it allows anyone to invest in weather conditions, to make an easy buck if those predictions are reached.

Consumers can invest in their weather predictions by selecting a date range, the type of weather, and the specific location based on Google Maps weather satellites. Precipitation is measured by inches, and temperatures set by degrees; and users can choose their own variables. For example, someone can purchase a weather insurance contract to receive a payout every time the temperature soars about 85 F in New York City. Every variable has a maximum payout which is dependent upon probability; although consumers might make 10 times their investment back when their contract pays off.

This unique type of weather insurance is ideal for businesses that depend on specific weather conditions. Golf course might lose money during rainy periods, so it would benefit them to take out a contract should precipitation reach certain levels during the height of golf season to ensure they protect their profits. Ski resorts on the other hand, may choose to invest in days with clear weather conditions if they rely on natural slow for their slopes.

For everyone else just looking to take a financial risk, Weatherbill is kind of like the stock market of global weather; instead of investing in the success of businesses, you predict and profit based on Mother Nature's actions.

Via: TechCrunch  

Mar 29, 2009
by Anonymous

Not weather insurance

WeatherBill does NOT offer weather insurance. WeatherBill offers weather derivatives.

Insurance is highly regulated, derivatives are not. For an idividual to purchase a weather derivatie, they MUST be an Eligible Contract Participant (ECP) generally requiring a net worth of at least $1,000,000 or assets of at least $10,000,000. There are no ECP requirements weather insurance. There may also be certain tax advantages to purchasing weather inusrance, as generally the proceeds from an insurance claim are nontaxable, whereas with a derivative payment???? Tax treatment also varies with regards to the premiums of both. As I understand it, a weather derivative transaction with WeatherBill is actually done through a hedge fund located offshore, then that fund posts cash to a bank in New York.

Why not simply buy a weather insurance policy from a fully licensed and admitted insurance company? A quick Interent search should provide you with several options for weather insurance.