Frequently asked questions

Is this a derivative or an insurance product?

This is an agreed value insurance, the value of the “insurable interest” is always demonstrated when we analyse the underlying weather risk.

Isn’t this too costly for my business?

The cover can protect your business’s profit & loss by reimbursing for loss revenues from adverse weather events while creating shareholder value from a profitability standpoint. In addition, the increased amount of insurer interest in weather has led to more capital providers and hence more competitive pricing.

How are other companies handling weather risk?

With the emergence of this new capital and more granular data, customers are able to better manage adverse weather from a contingency standpoint with weather insurance. The parametric insurance can also be combined with traditional cover.

Can we have weather stations on site if we aren’t comfortable with the basis risk and what is the cost?

Yes, we can organise third parties to assist with on-site weather stations and bespoke costings will be provided according to the location and weather type.

Are multiyear deals available?

Multiyear deals are available for up to 10 years. With evolving data, we feel this is sufficient for any project.

Can we use our captive to reinsure risk?

Yes – weather is generally short tail in nature and does not correlate with other lines of business so weather risk is an attractive proposition for captives to bear. You can also generate diversification risk from multi territory and perils.

When will we receive third party data updates?

Settlement data is generally delivered on a monthly basis.

When are claims settled?

Claims are generally settled within 14 days after expiry of the contract.

 

Aon UK Limited is authorised and regulated by the Financial Conduct Authority. FPNAT412