RMS Says Derivatives Stand The Heat

RMS Says Derivatives Stand The Heat

NU Online News Service, April 3, 11:14 a.m. EST?Risk Management Solutions says this year's abnormal temperatures show the value of weather insurance and weather derivative products for risk managers.

The Newark, Calif.-based provider of products and services for the management of natural hazard risks announced that its regional weather indexes registered a record warm winter in several regions of the United States.

RMS, which recently launched indexes to track seasonal temperatures across 10 U.S. regions, reported that weather was much warmer than average in the six regions covering the entire northeastern two-thirds of the country.

In the Northeast, the Mid-Atlantic and the Midwest, the indexes recorded their warmest values in the 30 years for which reliable data has been available for all of the 100 weather stations used to calculate index values, RMS said.

During the time period studied?from Nov. 2001 to Mar. 2002?the most extreme conditions were registered in the Northeast region, where average daily temperatures were 37.7 degrees Fahrenheit--4.5 degrees above the 10-year average of 33.0.

"The final index values? serve as a reminder of the value that weather derivatives and insurance offer to the wide range of businesses whose revenues are affected by the weather," Paul VanderMarck, managing director of weather risk products at RMS, said in a statement Monday.

He noted that RMS' indexes registered average daily temperatures in the Northeast, Mid-Atlantic and Midwest regions that were approximately 6 to 8 degrees warmer than during last year's winter.

RMS also reported that its indexes showed that winter weather was average in the South Central region, and was cooler than average in the Mountain States, the Pacific Northwest and the Southwest.

In addition to weather risk management products and services, Risk Management Solutions provides products and services for catastrophe and enterprise risk management.

RMS said that its final index values and the record of their day-by-day progression through the winter season can be viewed on www.climetrix.com, RMS' weather risk Web site.