Weather insurance provides some shelter from the storms

When the rain rain rain comes down down down, the outdoor segment of the out-of-home entertainment industry often sees profits washed down the drain gutter. The soaking taken by amusement parks, fairs and festivals in the Midwest and on the East Coast last summer is a painful reminder of the economic havoc Mother Nature can wreak on these and other operations.

In the past five years, however, as weather data reporting has become more reliable through a network of national weather stations, insurance against bad weather has been gaining acceptance.

About a half-dozen companies — AIG, Travelers Property Casualty Corp. and Lloyd's of London are among the bigger ones — provide such coverage as part of a growing phenomenon. Below that level are some specialty market insurance providers and a handful of reinsurers.

"It's been around a long time and never gained too much traction until about five years ago when the insurance companies (started getting) more information from weather stations and were able to rate risk better," says Raymond Liberatore, vp marketing at Boston-based All Weather Insurance. "The past five years have been incredible in terms of the growth in the number of users of the product."

The most common product is rain insurance, which allows the insured the ability to hedge against unrecoverable expenses such as ticket and concession sales losses. The policies are structured so that operators are reimbursed a predetermined value if a certain threshold of rainfall is met during the insured hours.

The cost is between 2% and 10% of the insured amount, so a $1 million policy would run an operator anywhere from $20,000-$100,000.

What kind of events can be covered?

"Any event or business that is impacted negatively or financially by adverse weather — any outdoor fair or festival, amusement park, any concert that's going on outdoors (can be insured against weather-related losses)," Liberatore says. He notes that even indoor events that are negatively impacted — if snowfall keeps people off the road and out of an arena for a show, for instance — can be insured.

"The bulk of the business is derived within the rain coverage spectrum: fairs and festivals, outdoor amusement parks, concert promoters, sporting events, rodeos, any event or business whose revenues are adversely impacted by weather, be it the Arizona State Fair, a rodeo in the Midwest or a Britney Spears concert in New York state," Liberatore says.

Derivative products that insure against losses from high or low temperatures, high winds — just about any measurable peril — are also available.

Liberatore won't discuss policies written for specific