A New Umbrella? A year-old on-line company
touts no-hassle weather ‘insurance’ for outdoor
Author: Terah Shelton
Date: April 01,2008

As tournament manager for the Greater Hickory Classic — an
annual PGA Champions Tour event — Pete Fisch is accustomed to
the unpredictable weather an outdoor event could experience. But
since the event’s inception in 2003, the weather had played a
very minor role. However, in 2005, a hurricane formed off the coast
of North Carolina and produced torrential amounts of rain from
Wednesday of the tournament and did not conclude until Saturday.
Ironically, prior to that it hadn’t rained in months. The
state was in the midst of a severe

“For lack of a better word, we took a ‘bath’ in
2005. I would estimate that we lost approximately $100,000 in
direct daily revenue. We never imagined it would rain as much as it
did,” said Fisch. “And after that we kind of saw what
rain could do to an event. When it rains at a professional golf
tournament, people don’t come out and you have revenue
that’s lost in tickets, concessions, parking, and other
areas. You still have a lot of overhead whether you play or

Ceres, a public-interest organization that urges business to engage
in environmental protection, recently estimated that
weather-related insurance losses rose from an average of about $5
billion per year 20 years ago to an average of about $15 billion
annually in the last decade. Even more, the Department of
Commerce estimates about 70 percent of U.S. businesses suffer
a negative impact from the weather each year in virtually every
industry: agriculture, construction, entertainment, travel, and
others. In a 1998 testimony to Congress, former Commerce Secretary
William Daley stated, “Weather is not just an environmental
issue; it is a major economic factor. At least $1 trillion of our
economy is

Patricia Sleicher, owner and president of Global Weather Insurance
Agency, Inc., highly recommends weather-related insurance to
protect those investments. “Weather insurance is designed to
protect anybody that has an interest in an indoor or outdoor
event,” she said. 

Experts date the history of weather insurance to the previous
century, when it was primarily used in the agriculture industry.
Today, weather insurance is written to cover a rainout or any event
that takes place outdoors.

“When I purchased weather insurance a few years ago, you had
a very short window of time that you would insure and a certain
amount of rain had to fall before you would get anything,”
said Fisch. “If the payout was $20,000 for a half-an-inch of
rain and it rained just shy of a half-an-inch, you didn’t get

However, over the past few decades, weather insurance has evolved
and simplified. Gone are the days of purchasing coverage for a
single-event or unexpected cancellations. Today, venue operators
can protect themselves against any type of weather: rain, snow,
sleet, wind and any kind of temperature: hot, cold, or unseasonable
temperatures for any duration of time, including

“We cover any weather-related peril: rain, snow, lightning,
wind,” said Sleicher. “Venue operators can purchase a
policy that covers them for a certain amount of rainfall over a
certain amount of money for a certain number of hours on a
particular day. If it rains, you would get paid whatever dollar
amount you insured. It’s a very simple policy.”

One of the new companies in this line is WeatherBill, which, unlike
traditional carriers, offers policies that can be designed and
priced online. WeatherBill was an exhibitor at this year’s
INTIX convention in Chicago, seeking more business in the outdoor
entertainment industry. A company must have a $1 million in net
worth to purchase WeatherBill

“I used to live across the street from a bicycle rental shop
in San Francisco and when it rained, I noticed the owner of the
shop wouldn’t come in because no one would rent bicycles in
the rain,” said David Friedberg, founder and CEO of
WeatherBill. “So, I started to put together the idea that it
made sense for business owners, managers, and others to provide
them with a product that would let them remove the risk of
unexpected weather happenings. They could basically buy coverage
that could pay them for any sort of weather-related conditions that
they’ve figured might hurt

After the 2005 rainout, Fisch gambled in 2006. It rained a little,
but not enough to impact business. However, for 2007, he and his
colleagues decided to explore the option of purchasing weather
insurance. They discovered WeatherBill, which provided a 20-year
comparison of historical weather during the scheduled tournament

“As an experiment in 2007, we invested about $1,000 in
coverage with Weatherbill (over 72 hours of coverage). Having never
done it before, we wanted to test the waters and it paid off for
us. We got 3 or 4 inches of rain. As a result of the rain we
received, the payout resulted in nearly $12,000. We were inside the
office joking that the rain didn’t sound like rain. It
sounded like ‘ca-ching!”   

WeatherBill’s weather-related coverage isn’t
technically insurance. There isn’t any underwriting, claims
process, or proof of loss. Even more, everything is completely
automated. Venue operators simply choose a weather station to have
weather measured — which is typically national weather
service stations nearby. Then, they either get a quote online at
Weatherbill.com or over the phone. Coverage can be purchased with a
credit card.        

Using a sophisticated computer system created by a team of computer
scientists and mathematicians, WeatherBill researches historical
data, forecasts, and climate models to come up with a fair price to
cover an event. Both parties agree on a weather threshold and if
that threshold is met, the customer gets a payout. Premiums are
paid regardless of whether the holder suffered a loss or not.

Weatherbill’s coverage is considered weather derivatives,
which are index-based, requiring that a weather trigger be breached
in order for payment to occur. A company that purchases this
weather derivative receives payment if the described weather occurs
and regardless of whether the company actually suffers a financial
loss. Alternatively, weather insurance requires both an index
measure and proof of economic loss.

“We created a product we consider easier to use than
insurance. You specify the type of weather you want to get paid for
and how much you want to get paid when that weather happens,”
said Friedberg. “Then, you pay the price for coverage. If
that weather happens, you automatically get a check for the exact
amount of coverage you bought within two business days. Unlike
insurance, there’s no claim process or no proof of loss. This
makes our product much cheaper and much more affordable than
traditional insurance.”

Budget concerns are a huge reason venue operators hesitate to
invest in weather insurance. Oftentimes, there is little or no
budget for insurance. “Unfortunately, weather insurance is
not considered a necessity and it’s not always in
someone’s budget,” said Sleicher. “But, a lot of
times they don’t want to spend the money on it or will just
take a chance.”

That was certainly the case for Fisch. “After looking over
the historical data we asked ‘what’s our budget and
what do we get for our budget?’ We kept thinking
‘let’s roll the dice what are the chances of it raining
again’, explained Fisch. “But, we decided to look at it
two ways: either there’s a good chance it’s not going
to rain or sooner or later it’s going to rain during that

According to Friedberg, when there’s a big amount of revenue
tied to some specific date for a specific event, every outdoor
venue should certainly consider purchasing weather insurance.

“If it rains, you may have to cancel the event and that would
mean a lot of lost revenue. Potentially, you still have to pay all
of your operating costs and pay your employees that showed up.
Concession sales can be significantly impacted by bad weather.
People aren’t necessarily going to buy as much beer as they
normally would. So, there are a lot of different ways the weather
can impact an event.”

Fisch is considering using WeatherBill again for the 2008 Greater
Hickory Classic. “In 2008, we are determining a budget for
coverage. I anticipate we will double our budget in 2008 to around
$2,000, but we will also fine-tune our coverage to better cover the
days that are most important to us. In addition, we will
investigate past weather patterns during our tournament time period
to determine what amount of rain is tolerable before our event is
significantly impacted.”

Overall, Fisch said weather risk management is now part of his
event planning and is not inputted under a miscellaneous category
of expenses in his budget. “This is something we need to do.
It may not work for everyone, but it is something people should
take a look at if they are concerned about weather. This is one way
to get paid for something that challenges your business.”


Interviewed for this story: Pete Fisch, (561) 624-8400; Patricia
Sleicher, (516) 466-3138; David Friedberg, (415) 986-4453