MIG Weather works with garden centers, vineyards, golf courses, water parks, hotels/resorts, car washes, fairs, festivals, special events and businesses that depend on certain weather conditions to optimize their revenue. The following example is for a Garden Center, but can be applied to virtuall any type of business or event.
The Garden Center’s main season is in the spring from April 15th – June 15th. With sunny weather during the period, the garden center will have good revenue results. However, excessive rain during the period can significantly reduce the income. Rain on Fridays, Saturdays and Sundays have the most impact on revenues and covering only those key days can also be addressed.
This chart shows the variation in revenue (in Thousands) for the garden center given the cumulative rainfall during the period.
The chart above is calculated as follows:
- Revenue in a normal spring: $950,000 – $850,000
- Revenue in a rainy spring: $800,000 – $650,000
- Precipitation in a normal spring: 6 – 10 inches
- Precipitation in a rainy spring: > 10 inches
- Period April 15 – June 15
The owners of the garden center were concerned about the fact that excessive rain reduces their revenues and overall annual performance. Given the climate variability in recent years, this is a not a risk they want to retain. The garden center decided to purchase a rain insurance cover from MIG. The coverage pays a pre-defined amount for every inch of rainfall recorded above a chosen threshold.
Weather Insurance Contract Terms:
- Type: Rainy Season
- Period: April 15 – June 15
- Weather Station: Mpls/St. Paul International Airport
- Threshold: > 10 inches of rainfall
- Payout per inch above threshold: $25,000
- Maximum Annual payout: $200,000
- Premium Cost: $20,000
This chart shows the variation in revenue (in Thousands) for the garden center given the cumulative rainfall during the period. Profits are reduced by the premium and increased by the payouts (red).
MIG was able to help the garden center greatly reduce their downside rain exposure and its affect on their revenue as follows:
Unprotected Best Case/Worst Case: $950k/$650k
Protected Best Case/Worst Case: $930k/$830k
Contact MIG to discuss your unique business and a structure that is customized for you.