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After the weather derivative market opened, that difference disappeared.
Finally, you need to negotiate a price for the weather derivative that makes financial sense.
com), announced today the release of WeatherBill White Label, a complete technology solution that powers branded third party weather insurance and weather derivative programs with a turnkey white label platform.
The annual PricewaterhouseCoopers analysis of the weather derivative market, conducted in conjunction with WRMA, revealed that trades at the Chicago Mercantile Exchange increased by 35 percent last year.
The natural catastrophe and weather derivative markets offer significant opportunities for uncorrelated alternative investment returns.
Since the inception of the weather derivative market, the number and type of market participants have continually expanded.
But the dealer may offset that risk by purchasing before winter a weather derivative that will pay a contractual amount depending on how much warmer than average the winter is.
For those businesses where the impact of the weather can be easily identified, a weather derivative (similar to a traditional financial derivative) is available to protect against the associated financial risk.
For example, say you buy a weather derivative that is triggered at a temperature of 92 degrees [Fahrenheit].
At the time of writing this review, a sampling of recent financial risk management news includes the following items: Japan's first weather derivative involving high wave levels recently went on sale; a development bank is readying what would be only the second weather-related bond offering for placement in the capital markets; and there are new efforts in the areas of providing real-time weather information and of weather derivative portfolio management software.
Weather derivative contracts may be written and based on the temperature at a station with 25 years of historical data.