Source: BI
Weather derivatives, originated in the late 1990s by recently deregulated U.S. energy companies looking to mitigate revenue lost to adverse temperatures, have evolved to become a multibillion-dollar worldwide business.
Today, observers and proponents say, the weather derivative market serves numerous business sectors and regions, as well as a host of risks.
Those advances, they note, are the primary reason the number of weather derivative contracts written globally last year reached more than 1.4 million through March, a record for the market, according to the Washington-based Weather Risk Management Assn.
The total value of those contracts rose as high as $45.24 billion in 2006, the year after Hurricane Katrina, and totaled $11.82 billion last year, according to the association.
Read More: Weather derivatives evolve as risk mitigation device
Cartoon by Bob Moran
