In our latest interview we spoke with Brian O’Hearne, President and CEO of eWeatherRisk a provider of online weather risk management solutions. Brian is a bit of a veteran in the weather risk management market having headed up weather business at Swiss Re and before that GuaranteedWeather.
Tell us about eWeatherRisk, what are you offering through the service?
eWeatherRisk is a comprehensive on line weather risk management platform designed for the end user as well as risk aggregators. We have 4,000 weather stations in North America where weather hedges can be structured and purchased and are in the process of adding another 6,000 for the most coverage of any weather risk provider.
Can you explain how the contracts eWeatherRisk sells work? Are they insurance policies or financial instruments like weather derivatives?
We sell financial instruments derived on an underlying weather index (thus a derivative) and do not require and insurable interest of proof of loss. The customer can create a custom weather index weighting its risk area. Currently we cover temperature and precipitation risk and are adding snowfall, wind and other weather variables.
What industries are you targeting with eWeatherRisk other than agriculture?
Agriculture is our primary focus for this spring and summer as that is where the weather related volatility resides. We are also working with energy companies for rather unique volumetric risk as well as price risk. Construction, retail and other industries are on the back burner and product development will start in earnest after the summer season
Having been involved in the weather risk management market for a number of years can you tell us what changes you’ve noticed in your time?
The market has proven its resiliency and value proposition time and again, first from the demise of the energy merchants and then the severe problems from the financial crisis. The more clients become aware of the market and its applications, the more applications develop. It has been remarkable what is happening in both the Agricultural and Energy markets as far as new ideas and the linkage between volumetric production and usage.
Technology plays an important role in weather risk management. How are eWeatherRisk using new technologies to provide a better service?
We have a solution oriented platform which can accommodate a virtually endless array of weather exposures including combining multiple risks into a single holistic hedge. We continually strive to stay at the cutting edge of technology and are in the process of rolling out forecast and market based pricing into all 10,000 of our weather underwriting locations in North America and then expanding internationally. The ability to research, see 60+ years of historical averages, minima and maxima for various weather risks, structure a contract in real time and purchase with the click of the mouse is what is needed to reach the scale and diversity required for a successful weather portfolio
The importance of managing weather risk is growing and gaining exposure due to recent events such as the flooding in Australia. Do eWeatherRisk have any plans to expand its suite of products to help businesses address the changing climate and increasing severity of events?
Our platform is well suited for managing event frequency and severity. Applications to bridge business interruption with a weather contract are already in our toolbox and available to clients.
Do you have any thoughts or predictions for the future of the weather risk management market?
We believe we are at the forefront of taking the weather risk market to Main Street from the current domain of just the larger players. As we and other providers do this on a global scale, the weather market should finally achieve its tremendous growth potential.
Our thanks go to Brian for his time and insight into the work of eWeatherRisk and the weather risk management market.