The independent platform which helps companies price Index-Based Weather Risk Protection
weatherXchange® believes that easy access to index-based weather risk protection is critical for businesses which need to address earnings volatility or uncertainty arising from weather. These businesses include farmers, energy companies, construction companies, and those in the retail and tourism sectors.
As an independent platform, weatherXchange makes accessing weather protection easier than ever before by streamlining the process of designing a weather protection contract.
weatherXchange is only available to larger corporate users, not private individuals.
weatherXchange makes no charge to those using the Platform to buy weather protection nor does it charge a broking fee or membership fee for Protection Sellers or Broker-Advisors. weatherXchange also takes no "soft-commission" from either Broker-Advisors or Protection Sellers on the Platform.
What is Index-Based Weather Protection?
The index-based weather risk market was established in the late 1990’s.
Index-based weather risk hedging uses observed weather data at a weather station to create an index on which a payout is based. This index could be total rainfall over a relevant period, or the number of days of minimum temperatures below zero. Most weather protection is designed to pay out when an index is above or below a certain level. Such structures can be very flexible and tailored to the risk profile of the Hedger. The buyer of Weather Protection can choose the most appropriate weather index, for any risk period, with any level at which payments start and with any desired monetary payment per millimetres of rain or per days of extreme temperatures (etc.).
Unlike traditional "indemnity" insurance-based cover, there is no need to demonstrate that a loss has been suffered. Settlement is completely objective, based on the final value of the chosen weather index over the period defined. If a payout is due, it is usually made in a matter of a few days with the Settlement Period being defined in the contract. So, unlike insurance contracts, there is no "loss adjustment" process.