WeatherBill's Success

While it's not a PM, WeatherBill seems to be doing well. This article mentions trade sizes in the tens of thousands, much larger than any weather-based contracts available on intrade.

On WeatherBill.com there is nothing about trading or contracts. The focus is on what a customer is interested in: a custom solution to hedge against weather.

Unlike companies that sell weather insurance or futures based on the weather, San Francisco-based WeatherBill lets companies create weather-specific coverage for their business.

Initially, energy companies used them as a hedge against unusually cool summers or warm winters, when energy consumption might be low.

Soon, corporate America embraced the concept and weather futures began trading on the Chicago Mercantile Exchange. But at that level, the contracts were complex and expensive, shutting out small firms.

That's where WeatherBill and others stepped in with customized derivatives. Clients pay a one-time premium that amounts to a percentage of the revenue the company wants to protect. WeatherBill has hundreds of clients, so the odds of payouts are in WeatherBill's favor.