Rained-out vacation bonuses
Sudden downpours on a planned big city weekend, a family glamping getaway or tee time with friends: we’ve all experienced weather ruining our holidays. With climate change more unpredictable by the year, Los Angeles-based Sensible Weather is offering a hedge: supplemental insurance coverage that automatically sends you a refund if the weather turns bad.
The climate tech and insurance start-up partners with a small range of travel and recreation companies, from resorts to theme parks, to offer a weather guarantee as an add-on to reservations. The cost is 8% to 12% of the total booking price.
“Golf rounds are slightly down in California since the beginning of the year, and that’s because of weather,” says Arjun Chowdri, chief innovation officer at PGA America. Plans to offer a weather guarantee provide value to professionals who run golf facilities, and a better experience for the individual golfer.
About 13 companies now offer Sensible Weather coverage. “Now we just need the partnerships to really sell it at scale,” says Nick Cavanaugh, founder and CEO of Sensible Weather. “With PGA and others, we’re going larger and larger.”
Sensible Weather promises weather insurance with no claims to file and no waiting periods for your refund. Let’s say you paid $12.78 to protect a $115 one-night camping trip in Tennessee in June, and then it rained for at least three hours. Under the terms of the Sensible Weather guarantee for that booking, you would receive a 100% refund.
Another example: if a family purchased $230 worth of tickets to a Mississippi water park and paid $9.50 for the weather guarantee, they would get a full refund if it rained three hours. The parameters vary according to the brand, location and time of year.
Because Sensible Weather continuously monitors the weather in guests’ locations, the claim is automatically triggered when conditions are met; customers receive a text message to collect.
“We have an enormous amount of weather and climate data sitting behind the scenes housed on Amazon cloud services, so hundreds of terabytes of data which we churn through on the fly to understand the probability that your beach vacation may get rained out,” Cavanaugh says.
The formula that Sensible Weather’s engineers and data scientists use comes from sources such as the National Weather Service, the National Oceanic and Atmospheric Administration and Nasa. Radar, satellites and modelling centres feed into the algorithms the firm uses to understand risk.
Noah Ellis, CEO of Yonder Hospitality, sees offering Sensible Weather protection as primarily about guest satisfaction, especially for seasonal properties. Partners do get commission revenue, but it is small, he says.
“Giving guests that mechanism to have some control and peace of mind for us is really important,” Ellis says. About 12% of bookings have added on the weather guarantee so far, depending on the month.
Cavanaugh says risk factors in his business model are no different from travel insurance. A margin is included that reflects what goes to the company, plus the 2% commission that goes to its partners. “All of these things add up to the price that the consumer pays when they purchase the weather guarantee. We’re selling this thing that ultimately covers a low-probability event but we add odds on top of that to make sure that on average, we’re covering our losses,” he says.
And, of course, it is not meant to be a replacement for more robust travel insurance.
The latter is limited, however, to flight delays or cancellations and trip interruptions resulting from inclement weather. There is also the effort of filing out claim forms and what may be a long wait for a refund.
Europe is the next step for Cavanaugh, with partnerships with Campsited in the UK and to-be-announced tour operators and mountain destinations in France and Switzerland.