Hurricane Risk Transfer
A major application of the Hurricane Mesonet is utilizing wind speed data during tropical events to create an index or series of indices that can be used to trigger financial contracts. WeatherFlow has created a parametric index solution called WindX™ designed to support the transfer and trading of catastrophic hurricane risk in the capital markets.
The current methods and marketplaces for transferring catastrophic risk are flawed and clearly insufficient for contemporary insurance and hedging needs. The goal of WindX is to allow insureds, insurers and reinsurers to separate hurricane hazard risk from the more uncertain property vulnerability risk. Either through direct reference to wind speed parameters or as a base input for derived indices, WindX supports a wide range of financial structures allowing parties to hedge specific risks or speculate for financial gain. WeatherFlow, along with it’s marketing partners and charter clients, believes that probability of occurrence for a hurricane, or more specifically the probability of exceeding a wind speed trigger, is understandable and therefore attractive to emerging capital markets players accepting catastrophic risk.
In addition to risk transfer, the network wind speed data is valuable to modelers, insurers, and investors for research and development.
Market development for WindX is a joint effort between WeatherFlow and New Paradigm Group (NPG), a leading catastrophe risk management company.