The accuracy of weather risk pricing has taken a significant step forward, after a weather insurance specialist launched a new pricing tool.
Celsius Pro’s Geo Quote offers adverse parametric weather quotes for any 5km square grid in Australia, doing away with the current situation of basing settlements off nearby weather station readings.
Celsius Pro Australia CEO Jonathan Barrett says this inaccuracy has been a major stumbling block for weather insurance in many industries.
“For instance, rainfall can vary from paddock to paddock, or suburb-to-suburb,” he says. “Basing settlement of contracts off weather stations presents an issue, as the rain may fall at your property and not fall at the station thereby not validating a rainfall contract when perhaps it was warranted.”
For example, growers who are worried about events such as frost or rainfall issues are able to lock in an adverse weather contract up to 20 days out.
“Basically, he keeps an eye on the weather and if forecasts suggest a period of instability then he can execute the contract immediately, covering off on any weather risk that could affect his profitability,” he says.
“Due to the ease of execution and availability of matching of data, growers can use these contracts to help secure lost yield or crop downgrades when prospects of adverse weather present themselves.”