Rain: ‘You can’t get insurance for these sorts of things’

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Every few months we see an article in the press which shows that weather risk management techniques and the options available to hedge against bad weather conditions are not widely understood by business owners and the general public. In this example the organiser of a festival in New Zealand is discussing how rainfall can affect their event and says ‘You can’t get insurance for these sorts of things’.

As most readers of Artemis will know, you can get insurance or risk protection for most weather conditions if you speak to the right people, but to do so you must be aware of the options in the first place.

In this article in Sun Media’s local online newspaper from New Zealand, the organiser of the festival mentions that they hold their own ‘rainy day fund’ (which they see as self-insurance) to provide them with some financial recompense should it rain and attendance be low as a result.

The organiser says: “Insurance is exceedingly difficult to claim on because you need to be able to prove that it was a threat to life and limb. If it was simply a very wet day and people didn’t turn up, even though you have wet weather insurance, doesn’t mean to say you can claim on it. We’ve been through all that and we have decided that it’s actually more cost effective to self-insure. Hence we have always kept a fund aside to cover that sort of rainy day eventuality.”

What they really need is a rainfall cover which is linked to the amount of rain that actually falls on the day of the event. It would be possible to model the potential financial impact to the event if more than a set amount of rain fell and as long as there is a local weather station which can measure the climate on that day (this can be a problem as weather stations do not always exist in proximity to an event).

As the availability of weather risk cover which is either index-linked or triggered by actual weather conditions becomes more readily available (and cheaper) we hope to see these types of comments disappear in the future.

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