Frequently asked
Questions

Questions

Glossary of Key terms

Data Sets Used for Weather Certificates

Frequently asked questions

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What type of weather events do people use weather certificates for?

What are Weather Certificates?

Is a Weather Certificate an Insurance product?

Weather Certificates have similar characteristics to some financial options in that they are based off an index. The index is made up of weather events. You pay a premium to buy certain rights associated with the index, for instance rain or temperature events over a trigger/strike. They are simply based off the probability of an event occurring.

Any weather event that may cause financial discomfort can be covered by the use of a Weather Certificate for example, you may be farmer looking to cover the risk of a dry season, an events coordinator worried about rain on the day of the event, an outdoor restaurant worried about a wet spell, or a golf course owner looking to make up lost green fees. Weather Certificates are universal in their application as we are hedging events as a consequence of the weather.

Although you are insuring the effects that weather has on you financial viability they are not insurance products. Rather a Weather Certificates is classed as an over the counter derivative and thus regulated as such by the financial markets regulator.

Are there any applicable stamp duties or government charges?

There are no stamp duties or GST. The reason is that Celsius Pro is the issuer of the Certificate it comes to you net of any ancillary charges.

Who is ultimately responsible for settlement of payment of a Certificate that has expired where a payment is due?

It is Celsius Pro management mandate that it hedges all certificates with its counter-parties who are all global reinsures. Therefore, performance risk is associated with the counter-party we hedge your Weather Certificate with.

Are Weather Certificates regulated by anyone and what happens if I have a dispute?

Weather Certificates are over the counter financial products regulated by ASIC. CelsiusPro is also a member to the Australian Financial Complaints Authority (AFCA). This is outlined in our Financial Services Guide.

How soon can a Weather Certificate be booked?

They can be booked 20 days out from the risk period. They cover a monetary value chosen by the buyer that covers the potential damage caused by the weather event.

Can I lose more than my Premium once I have purchased the Certificate?

All you can lose is the premium. 

Can I sell my Certificate before it expiries?

They are generally not tradable once you have purchased them.

Do I need to submit a claim once I feel that a weather event has been triggered?

No. Any damage caused by the event does not have to be assessed. The damage is the consequence of the weather event occurring. The Weather Certificate covers the weather event. Weather Certificates are non-indemnity based financial products.

If the events described in a Certificate are triggered what is the process and when shall I receive payment?

Once a Certificate expires and an event has been triggered the binding results will be emailed to you after 5 days for certificates based of an automatic weather station, and 20 days when based off a grid location. If you have an online account you can also see the non-official results day by day. Then to allow for actual settlement it may take up to 15days further before they funds arrive in your account.

Who is the gatekeeper of the weather data?

The BOM is the gatekeeper. Weather events are automatically down loaded into the CelsiusPro software daily. If you have a dispute about the actual events then you need to take this up with the BOM. Celsius Pro just uses their measurements.

When are weather measurements made?

As it is the BOMs data we use in structuring the certificates we follow their data collection protocols. If it is not clear as to when the times for measuring data start and end then contact the BOM.

What is grid data?

To understand how grid data is generated go to this helpful link. Also the climate maps on at BOM provide daily readings for grid data.
http://www.bom.gov.au/climate/data-services/maps.shtml

If you have any questions then please feel free to contact us by either sending an email to

info@celsiuspro.com.au

Or call us on

+ 612 9994 8009

Data sets used for
Weather Certificates

When structuring a Weather Certificate, you have to make sure that the data used is an appropriate measure for the cover and circumstances being insured against. As the trigger for the cover to pay needs to be tightly correlated to your risk. There are two types of data that is used to price and settle Weather Certificates:

BOM Weather Data sets are derived from Weather Stations where readings are made automatically or manually from a single geographic location. 

BOM Gridded Data Sets are derived from data sourced from ground stations, upper air observations, satellites, ships or buoys. A computer analysis technique then applies a weighted averaging process to the data which generates grid points across Australia. This grid-point analysis technique provides an objective average for each square of the grid (5km x 5km). It is just like having a weather station in the middle of the grid.

An analysis of the data is made so as to make sure that it is “fit” for purpose for the area and the type of risk that is to be insured. Experience has taught us that Weather Station data is a good fit for covers involving temperature, whilst Grid Data is a good fit for covers that are rain related. Once a tight correlation is made then a structure can be deigned that will help to reduce the effects of the peril on income. The information below gives you an insight into how we use Data to create you Weather Certificate

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Below represents one of the grids that we collect our data from:

Once we download the data from this grid we can then correlate this data with the clients, to demonstrate the accuracy and reliability,  as we can see below: 

We then show the grower how many times a chosen Certificate has payed out under different strikes, similar to the graph below:

People don’t plan to fail but generally fail to plan. So plan ahead! Weather Certificates are tools to use to hedge unforeseen events ie a dry spring, frost, wet harvest etc.

Identify the risk.

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Here is a Simple guide for you to follow when buying a Weather Certificate:

Identify the risk period.

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Identify which data source is best to use.

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Make sure the data is “fit for purpose”.

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Using a Growers own data source to compare BOM Grid or station data to it. 

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Understand the years of incidents.

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Understand the financial consequences of not covering this risk.

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Be comfortable that this data will be used to price and settle certificates.

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Make sure you have enough data to make a structure work ie reasonable time period with a reasonable amount of cumulative mm or degrees.

Structure a cover with help from CelsiusPro.

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Analyse payout data of the structure to make sure appropriateness.

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Check Start date to make sure it is not in the forecast window, ie the risk period starts 20 days out.

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Once you have bought your Weather Certificate it is designed to set and forget and only called on should unlikely events occur. 

Weather Certificates have similar characteristics to some financial options in that they are based off an index. The index is made up of weather events. You pay a premium to buy certain rights associated with the index, for instance rain or temperature events over a trigger/strike. There are simply based off the probability of an event occurring.

Although you are insuring the effects that weather has on you financial viability they are not insurance products. Rather a Weather Certificates is classed as an over the counter derivative and thus regulated as such by the financial markets regulator.

Any weather event that may cause financial discomfort can be covered by the use of a Weather Certificate for example, you may be farmer looking to cover the risk of a dry season, an events coordinator worried about rain on the day of the event, an outdoor restaurant worried about a wet spell, or a golf course owner looking to make up lost green fees. Weather Certificates are universal in their application as we are hedging events as a consequence of the weather.

It is Celsius Pro management mandate that it hedges all certificates with its counter-parties who are all global reinsures. Therefore, performance risk is associated with the counter-party we hedge your Weather certificate with.

There are no stamp duties or GST. The reason is that Celsius Pro is the issuer of the Certificate it comes to you net of any ancillary charges.

Weather Certificates are over the counter financial products regulated by ASIC. Celsius Pro is also a member to the Financial Ombudsmen Service. This is outlined in our Financial Services Guide.

They can be booked 20 days out from the risk period. They cover a monetary value chosen by the buyer that covers the potential damage caused by the weather event.

All you can lose is the premium. 

No. Any damage caused by the event does not have to be assessed. The damage is the consequence of the weather event occurring. The weather certificate covers the weather event. Weather Certificates are nonindemnity based financial products.

They are generally not tradable once you have purchased them.

Once a Certificate expires and an event has been triggered the binding results will be emailed to you after 5 days. If you have an online account you can also see the non-official results day by day. Then to allow for actual settlement it may take up to 15days further before they funds arrive in your account.

The BOM is the gatekeeper. Weather events are automatically down loaded into the Celsius Pro software daily. If you have a dispute about the actual events then you need to take this up with the BOM. Celsius Pro just uses their measurements.

As it is the BOMs data we use in structuring the certificates we follow their data collection protocols. If it is not clear as to when the times for measuring data start and end then contact the BOM.

To understand how grid data is generated go to this helpful link. Also the climate maps on at BOM provide daily readings for grid data.
http://www.bom.gov.au/climate/
averages/climatology/gridded-
data-info/gridded-climate-data.shtml

If you have any other questions then please feel free to contact us by either sending an email to

info@celsiuspro.com.au

+ 612 9994 8009

Or call us on

Glossary

General Terminology

Technical Terminology

Risk PERIOD

Period means the period between and inclusive of the Start Date and the End Date as specified in the Term Sheet for that Weather Contract.

End Date

The date on which the Risk Period ends (inclusive of the date) as specified in the Term Sheet for the Weather Certificate.

Start Date

The date on which the Risk Period starts (inclusive of the date) as specified in the Term Sheet for the Weather Certificate.

Payout

Is the dollar (AUD) amount by which a Weather Certificate pays its owner over that risk period depending on the parameters and the respective weather.

Strike

The Strike for a Weather Certificate is as specified in the Term Sheet for the Weather Certificate. Without limitation as to the kinds of Strikes which may be agreed with the Client, the Strike may be specified by reference to weather data over a number of days or by reference to a number and kind of Critical Days (see below for a definition for a critical day). If the Strike occurs in accordance with these Terms and the Term Sheet, the Client is entitled to the Payout Amount. Definitions of particular Strikes may be given in a disclosure document or CelsiusPro Australia’s website or they may be individually specified and agreed with the Client by way of a Term Sheet.

BOM

Stands for the Bureau of Meteorology, the agency established under the laws of the Commonwealth of Australia providing observational, meteorological, hydrological and oceanographic services and its successors.

PRICER

The online trading platform CelsiusPro uses to indications on the premiums of Weather Certificates. 

Maturity

Is the date that a Weather Contract expires, as specified in the Term Sheet for that Weather Certificate. 

Terms

The terms of your agreement with CelsiusPro and the Weather Certificate. These will be whatever version of terms are current at the time of issuance of your Weather Certificate (and so cannot be changed without your agreement even if CelsiusPro issues a new version after issuing a Weather Certificate to you). They are available to you by emailing us at info@celsiuspro.com.au 

Confirmation

Refers to the electronically issued document confirming  payment  terms of the contract. 

MILLIMETRE (mm)

Refers to the official measurement of precipitation.

Threshold 

Used in a Term Sheet for a particular Weather Certificate (if relevant to the features of the Weather Certificate) as a shorthand way of referring to a particular amount of weather data, specified in the Term Sheet, which must occur before the Critical Day occurs.

Underlying

Used in a Term Sheet for a particular Weather Certificate as a shorthand way of referring in the Term Sheet’s description of the Critical Day to a longer definition (in the Term Sheet) of a particular weather event, such as “Daily Minimum Temperature”.

Grid Reference

This is the longitude and latitude grid location of your property. Click on the link below to get a grid reference for your location : 
https://www.longpaddock.qld.gov.au/silo/

Gridded Data

Refers to the spatial climate data sets provided by the BOM in a two dimensional grid which  accurately pinpoints and measures climate data to a 5x5km area anywhere in Australia. 

Weather Station

The state authorised climate data collection point for a specific area.

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Critical Day

Is as specified in the terms sheet for the weather certificate. These can fall under categories such as Rain Day, Cumulative Rain, Cumulative Rain shortfall, Minimum Daily Temperature, Maximum Daily Temperature. 

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