The Marketplace Reader

Doing something about the weather

Richard Core Aug 7, 2008

A fascinating story posted on today about a company called WeatherBill, which uses Google-like technology to allow businesses — from a local golf-tournament organizer, to car-wash operators, to — to insure themselves against losses due to the weather.

The potential market for weather coverage is huge, since as much as 70 percent of American businesses are impacted by weather in some way. While the risks for companies like agricultural firms are obvious, businesses from movie theaters–which see ticket sales slump on sunny days–to transportation companies and clothing manufacturers are affected by the weather. It’s estimated that $2 trillion to $3 trillion of the United States’ nearly $14 trillion G.D.P. is weather-sensitive.

The company is the brainchild of David Friedberg, who had previously been the business product manager for Google’s AdWords and a founding member of the company’s corporate-development group. He left Google in 2006.

Just as AdWords integrates the latest market changes on a continuous basis, the WeatherBill pricing engine correlates up-to-the-minute weather forecasts with trend data to assess a company’s overall risk. Then it spits out a price based on all those factors, with all of this happening in a tenth of a second, and contracts can be purchased right up to the last minute since the latest weather information automatically gets incorporated into the pricing engine.

Before the Portfolio article, WeatherBill caught the attention of other publications, including The Economist and The Sunday Times of London,

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