Speedwell Weather plans parametric weather risk transfer platform

by Artemis on June 7, 2016

Speedwell Weather, a provider of weather data, forecasting information, analytics, software and consultancy to the weather derivatives and weather risk management market, is planning to launch a free platform to facilitate parametric weather risk transfer.

Announced today, Speedwell has launched SWS Version 11, the latest version of its weather derivative pricing and weather risk management software which has been in use widely in the market since its first release in 2001.

Interestingly, one of the new features announced is integration with a forthcoming “free-of-charge platform which facilitates parametric weather risk transfer” called weatherXchange.

Speedwell Weather is already the leading settlement agent in the weather risk management market for parametric weather risk contracts world-wide, providing the data and settlement tools for weather derivatives and other risk transfer or insurance contracts.

Adding a platform which taps into its already influential position in the weather risk management market to offer users (we assume) the ability to structure, price, execute, trade and settle parametric weather risk transfer contracts seems a natural next step.

Michael Moreno, Co-CEO of Speedwell Weather, commented on the launch; “This latest version of SWS offers important developments to support the forthcoming weatherXchange platform. These latest features are designed to help SWS users when responding to RFPs on weatherXchange by automating the interpretation of RFP messages and by providing ease of access to the required historical data for pricing.”

Version 11 of the Speedwell software released today features “Seamless integration with the new cleaned database of tradeable sites that are used by the forthcoming weatherXchange platform.”

That suggests that users of the forthcoming weatherXchange platform who also utilise SWS Version 11 would be able to create a parametric risk transfer contract for any of the tradeable sites, which are likely to be weather stations, then price and settle it using other Speedwell Weather services.

While we’re making a few assumptions here, given the lack of information available about weatherXchange at this stage, it seems a logical step for Speedwell Weather to take. Placing them into the realm of the transaction facilitator, as well as forecasting, pricing and settlement data provider.

Another new feature added in V 11 of SWS is “Automation of the import and export of weatherXchange Request for Proposals (RFPs).”

This shows that Speedwell Weather plans for RFP’s to be able to be passed from weatherXchange into SWS, and vice versa. With weatherXchange likely a software tool for creating the parametric contract structure and terms, SWS will likely provide the pricing, ongoing management and settlement aspects.

Other new features in SWS Version 11 are; direct access to the Speedwell historical forecast archive, essential for the pricing of any contracts created in weatherXchange. And also the integration of new Speedwell gridded data services and Integration of new Power-Curve Builder Scripting Tool, enabling users to easily transform a power curve into an SWS-compatible index which will in turn integrate with the new Speedwell Power Curve API.

With the focus on insurance technology lately, or insurtech, any offering that facilitates creating a risk transfer contract could receive a lot of attention. It could make it much simpler for weather risk management market participants to set up and construct their contracts, while Speedwell will also be able to help them get them priced and settled as well.

Of course the ILS and alternative reinsurance capital market has long been a participant in the weather risk transfer and weather derivatives market. In fact in recent months interest among ILS funds in weather risk appears to be on the rise.

As a result Speedwell Weather’s new parametric risk transfer platform will likely be of great interest to those ILS or reinsurance players looking to simply and efficiently create and transact parametric weather risk contracts.

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