With Raincheque, courses pay an annual premium – starting from just £1,100 – and could recover up to £100,000 of lost revenue depending on the level of cover taken.
And unlike insurance policies, because Raincheque uses a weather risk management model there is no need to prove loss of revenue: guaranteed payouts occur based on pre-set levels of rainfall at specificUKlocations.
The annual premium guarantees a payout for up to 20 days of income lost from adverse weather conditions.
Raincheque is offered to clubs by PPJ Golf Services Ltd and OTL (UK), who work in partnership with Coriolis Capital Limited aLondon based weather risk management specialist.
For 13 years, Coriolis have helped companies around the world to reduce their risk associated with adverse weather conditions. They are regulated by the Financial Services Authority and are members of the Weather Risk Management Association.
Said Pat Stanford of PPJ Golf Services Ltd: “Golf courses were decimated by the weather in 2012 and Raincheque is a very cost-effective way for courses to safeguard themselves against similar heavy losses next year.
“Courses cannot control the weather, but Raincheque gives guaranteed management of the effect it has on day-to-day revenues. With Raincheque, any club’s financial controller can ensure more consistency to revenue and earnings by removing the risk of unknown weather factors.”
Raincheque smooths out the financial effects of climatic variance by employing a weather derivative hedge against the probability of certain events occurring.
This financial instrument is used to reduce the risk associated with adverse or unexpected weather. The seller of the derivative accepts the risk by charging a premium to the buyer.
If nothing happens the seller makes a profit, but if the weather turns bad the buyer (any golf club) receives a pay-out.
Derivatives are more suited than insurance to the golf industry because they serve as a tool for hedging the economic loss, focusing on day-to-day variations and not one-off disasters like hurricanes
They do not call for a ‘proof of loss’ – data collated and published by independent meteorological stations is used to calculate the make-up of agreements . Pay-outs are triggered automatically when agreed conditions are met.