Tokio Marine HCC’s Specialty team looks into the changing shape of weather insurance in light of the increase in extreme weather conditions that are affecting businesses on a global scale.
The operating and financial performances of 70% of businesses worldwide are disrupted by abnormal weather according to the latest research. Preventing these anomalies is not feasible but that does not mean businesses should sit back and accept that it may just be bad luck that has seen their profits tumble.
Undesired weather could mean loss of income for some or it could result in additional, unwanted costs for others. For example a wind farm might be dependent on sustained strong winds over a year, whereas a production company using camera drones may be threatened by high winds on a particular day. An open roof top bar thrives when there is a rain free and warm weekend, whereas cinema sales are boosted if it is both cold and rainy at the weekend. Despite this, businesses have been reluctant to embrace weather insurance as a viable solution; traditional weather insurance has been undermined by insurers relying on a network of ground weather stations which are geographically sparse. This data doesn’t provide the necessary quality, quantity or peace of mind to insurance buyers in order to justify their investment in weather insurance. So what can a business do to “Weatherproof” their financial performance?
Through an exclusive partnership with Weather Analytics, Tokio Marine HCC is now supplying bespoke global weather coverage based on a precise latitude and longitude while also offering hour by hour indemnity to suit a firm’s particular exposure to snow, rain, hail, wind, or temperature. How? A gridded data model utilises data from 40,000 professional weather stations, geostationary satellites, radars, weather buoys, flight path recordings and military bases meaning that wherever you are in the world, there is an insurance solution. The result is that Tokio Marine HCC has up to 50 times more global weather data in comparison to other competitors to accurately underwrite and verify the risk.
The success of companies working in a range of industries including: tourism, utilities, events, agriculture, logistics, retail, construction and leisure are all at the mercy of the weather. Every business that has ever been washed out, rained on, snowed under or blown off course can benefit from weather insurance. With help from Tokio Marine HCC, wine growers have safeguarded their harvest against temperature extremes, construction projects have kept to strict public funding, festival organisers have avoided pouring away their profits, retailers have drawn internet shoppers back to their stores with weather promotions and theme parks have protected peak revenues during public holidays.
Year on year the weather will continue to surprise and shock us whether it’s the hottest, coldest or wettest since records began. However, the financial forecast of a business need not be quite so bleak with specialist solutions to help them ride the storm.