What Are Index Products?
Sometimes the traditional insurance market is unable to provide a solution for natural peril exposures. In these cases weather derivatives or index products may be a cost effective risk management option to consider. They are simple contracts that respond when specific weather triggers are recorded at a particular meteorological station, or group of stations.
What Can Be Covered?
AgriRisk’s experienced staff will analyse your specific exposure to assess the
appropriateness of a weather derivative solution. They can be structured to
financially protect a farm business from exposures such as:
- insufficient rainfall during the planting window or growing season
- excessive rainfall at harvest
- temperature extremes such as frost at flowering or excessive heat at critical
- stages of crop growth
- lack of heat units during the vital growth stages of the crop
- excessive wind
Risks that have a quantifiable unit of measure for which the exposure can be
assessed and the product can be structured, for example rainfall in mm or
temperature in degrees celsius. The data must have an adequate historical dataset from a verified, reputable source. For example Bureau of Meteorology Certified Weather Stations.
What Do They Cost?
The overall cost will depend on the historical analysis of the weather data in
question and the level of coverage required.
Weather Derivatives are not insurance products and special licencing is required to provide advice in this area. AgriRisk is one of the few insurance brokers licensed to provide advice and offer weather derivative products in Australia.
AgriRisk takes the hard work out of choosing insurance.
Our team of experienced and friendly brokers will:
Determine your individual needs, including risk profile and budget
Approach a range of insurers to determine the most appropriate products for your business
Obtain a number of quotes, and negotiate the best price possible
Provide expert advice and make recommendations about the best risk management solution, at the best price