Swiss Re Insurance-Linked Fund Management

PCS - Emerging Risks, New Opportunities

Wintry weather in U.S. increases interest in snowfall derivatives


It’s two years since the Chicago Mercantile Exchange (CME) launched its snowfall derivative contracts giving market participants a way to hedge the risks of there being too much snowfall and that impacting their business and profits. The snowfall contracts have been gaining traction and increasing interest especially since the recent snow storms have struck the U.S.

This winter (and last) in the U.S. has seen heavy snowfalls across much of the country, along with lower temperatures than in previous years and the impact this has been having has caused an uplift in snowfall derivative contracts trading on the CME.

So far this year the CME has sold five times as many snowfall contracts as last year (according to this radio interview). That is significant market growth and shows that the CME and brokers are effectively marketing these products and drawing in new customers.

This winter has seen an increase in weather refund promotions as well and these are now beginning to become quite common among retailers looking to hedge the risks of the weather impacting their sales. In many cases derivative contracts traded on the CME underpin these promotional deals.

Snowfall derivative contracts appear to have a bright future as long as the snow continues to fall during winter months. Companies, such as snow removal and ski resorts, will always have a reason to hedge the risks of there being too much or too little snow.

Artemis Live - ILS and reinsurance video interviews and podcastView all of our Artemis Live video interviews and subscribe to our podcast.

All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance video content and video interviews can be accessed online.

Our Artemis Live podcast can be subscribed to using the typical podcast services providers, including Apple, Google, Spotify and more.

Print Friendly, PDF & Email

Artemis Newsletters and Email Alerts

Receive a regular weekly email newsletter update containing all the top news stories, deals and event information

  • This field is for validation purposes and should be left unchanged.

Receive alert notifications by email for every article from Artemis as it gets published.