The disappointment is real when less-than-ideal weather conditions threaten to put a damper on that beach vacation or camping trip you’ve dreamed about for months. It’s enough to make you reconsider going at all, or, worse still, leave you with a serious case of buyer’s remorse.
Nick Cavanaugh, founder and CEO of Sensible Weather, wanted to find a real solution to that all-too-common problem, and he was uniquely positioned to do so, having worked both as a climate scientist and consultant.
So he did. Sensible Weather’s service is simple: It offers customers paying for a trip or activity outdoors a weather-guarantee protection based on the expected weather conditions in a particular location. Customers can rest assured they’ll have a good time — because they’ll be automatically reimbursed if it rains.
Image credit: Sensible Weather
It was a fantastic business opportunity. But for Cavanaugh, the venture went beyond that.
“After spending 10 years at the intersection of climate, data and finance, I still felt that there was this gap,” Cavanaugh explains. “Most people didn’t really understand how climate and climate change affected them. And my goal was to build a product that could be as relevant for as many people as possible, to show them directly, ‘This is why it matters in your life.'”
Because Sensible Weather launched during the pandemic, outdoor recreation and camping/glamping became its first two main verticals, driven by the reduced demand for travel involving flights or hotel stays, Canavaugh says. But today, Sensible Weather boasts more than a dozen partners, including the PGA of America and Rebel Hotel Company’s Manhattan property The Renwick — with plenty more on the horizon.
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“We often wind up with a Weather Guarantee that costs 8-12% of the trip cost.”
Sensible Weather “turns the whole insurance idea on its head,” Cavanaugh says, as it’s entirely data-driven and consumer-experience-oriented. There’s no underwriting based on human experience or reliance on filed claims for reimbursement, which streamlines Sensible Weather’s process from pricing to payout.
“We underwrite based on weather and science around weather probabilities, and that’s what dictates how much a particular coverage costs,” Cavanaugh explains. “And then on the fulfillment end, if, say you’ve purchased a rain guarantee for your golf outing on that day, we’ve said, ‘Hey, if it rains for this long, if it rains for this much, we will pay you back.’ So we don’t require the golfer to tell us how much it rained. We know how much it rained, so we just put the money back in their hands.”
The number of hours of rain needed to trigger a payout is subject to seasonality and locale, Cavanaugh says, noting that “for obvious reasons” consumers are generally less inclined to travel to places during times of the year when the weather is likely to be bad there. “Or at least if they are, they aren’t traveling to these places contingent upon weather-sensitive activities, and therefore aren’t our target customers for the Weather Guarantee anyway,” he adds.
In other words, Sensible Weather’s pricing very much hinges on the reasonable weather expectations people have for their trip.
“In wetter destinations, they may be more tolerant of a little rain, whereas in drier destinations, they may be intolerant of any rain at all,” Cavanaugh says. “By adjusting the threshold of rain needed for reimbursement in these two examples, we often wind up with a Weather Guarantee that costs 8-12% of the trip cost.”
Sensible Weather’s guarantees are very rarely more expensive than that, Cavanaugh says, and in fact are often significantly less expensive in drier locations, like Arizona.
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“We needed to build [the technology] ourselves because it needs to be very, very fast, and very scalable.”
Sensible Weather’s consumer experience is seamless and straightforward because of the technological complexities unfolding behind the scenes. The company relies on data from a comprehensive modeling suite and observations based on information from satellites or radar, combining them to get a full picture of the weather risk.
“The coverage of these data sets is global,” Cavanaugh says, “so the specific area would be indexed by its latitude, longitude coordinate, and then there’s a time component which could be going backward — things that have already happened — or forward, like in a weather forecast model or a climate projection.”
On the weather-guaranteed day itself, that data combination is also in play, ideally predicting unfavorable conditions before the consumer even experiences them.
“We can say ‘Hey, you’re going to be at this music festival for the next couple of hours, and we’re expecting it to be raining at this time. Here’s your money,'” Cavanaugh explains. “But we also have various real-time weather observations [on the back end] that can say, ‘This is what actually happened.'”
We can say, ‘Hey, it’s not going to be a great day. We want to put some money in your pocket.’
Sensible Weather designed a proprietary technology to make the end-to-end process possible. “The reason that we needed to build it ourselves is because it needs to be very, very fast, and very scalable,” Cavanaugh says.
The key is not to disrupt the online purchase flow for Sensible Weather’s partners, Cavanaugh explains. And so far it’s paying off. The response has been positive, with customers appreciating the preemptive payments and partners enjoying reduced friction to purchase and fewer complaints when the weather takes a turn for the worse.
Cavanaugh looks forward to expanding Sensible Weather’s offerings into different coverage areas, including snow, wind, temperature and air quality, and to getting the product into more people’s hands.
“Opting in at point of sale is what most people think about when you think of a supplemental coverage product,” Cavanaugh says. “That said, we can bundle it; it can come in your room rate. We can have credit card benefits. There are a lot of ways that we can build this behind the scenes, where maybe customers know they have it, or maybe they don’t. But in the moment, we still have this surprise and delight factor — We can say, ‘Hey, it’s not going to be a great day. We want to put some money in your pocket.'”
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