Financial activity based on natural peril events

• US 20080065521A1
• Filed: 10/31/2007
• Published: 03/13/2008
• Est. Priority Date: 12/21/2004
• Status: Active Grant

• Current Assignee: Weather RISK Solutions LLC
• Original Assignee: Weather RISK Solutions LLC
• Inventors: Horowitz, Kenneth
• Granted Patent: US 7,783,543 B2
• Time in Patent Office: Days
• US Class Current: 705/35
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis

Abstract

A financial activity network includes a central managing system connected to a plurality of participant terminals. Rules governing operation of the financial activity are stored for future reference. A participant provides investment information such as a map location for the predicted strike by the natural peril event and, optionally, one or more secondary parameters relating to the natural peril event, such as the time interval between the time of investment and the time of an event strike and/or the severity of the event strike according to an established scale. In one example, an external objective independent information source is consulted, with the external objective independent information source providing monitoring, interpretation and derived determination of parameters pertaining to the natural peril event. Methods and articles of manufacture are also disclosed.

Claims

1. A system for conducting a financial activity based on a natural peril event, comprising:

a financial activity module for facilitating financial activity between a provider and at least two participants, for receiving natural peril event information from an external independent information source of such information and for providing financial activity information to the participants, including information relating to the natural peril event information and a plurality of geographic regions for which the financial activity is to occur and in which a future natural peril event may occur;

at least one communication module for communication between the financial activity module and an external independent information source for receiving the natural peril event information;

the financial activity module also providing index information including an index having an index value varying in response to one or more natural peril events;

the financial activity module presenting to the participants at least one derivative product to be traded between the participants, for a plurality of geographic regions, the derivative product having a value that varies in response to the index and which is settled based on at least one of the external natural peril event information and the index information.

2. The system according to claim 1 wherein the communication module presents a null region, available for trading, designating no tropical weather event in any of the plurality of geographic regions.

3. The system according to claim 1 wherein the financial activity module receives index values for each of the geographic regions.

4. The system according to claim 1 wherein the derivative product comprises one of a futures contract, an options contract or an option on futures contract.

5. The system according to claim 1 wherein the index value varies in response to one of said estimates, said observed data and said insurance claims pertaining to damage relating to the one or more tropical weather events.

6. The system according to claim 1 wherein the natural peril events relate to a natural peril event originating either on land, at water level or below water level.

7. The system according to claim 1 wherein the index value comprises a cumulative index value that varies in response to damage information relating to multiple natural peril events occurring in a season defined by the financial activity module.

9. A method for conducting a financial activity between a provider and at least two participants, based on a natural peril event, comprising:

the provider receiving natural peril event information from an external independent information source of such information;

the provider receiving index information from an external independent information source of such information, the index information including an index having an index value varying in response to one or more natural peril events;

the provider providing financial activity information to the participants, including information relating to the natural peril event information, and a plurality of geographic regions for which the financial activity is to occur and in which a future natural peril event may occur;

the provider presenting to the participants at least one derivative product traded between the participants, the derivative product having a value that varies in response to the index and which is settled based on at least one of the natural peril event information and the index information.

8. The system according to claim 11 wherein the cumulative index value is determined for all of the geographic regions, considered together.

10. The method according to claim 9 wherein the step of presenting to the participants at least one derivative product comprises the step of presenting to the participants at least one derivative product traded between the participants for each of a plurality of geographic regions.

11. The method according to claim 9 wherein the provider receives index values for each of the geographic regions.

12. The method according to claim 9 wherein the derivative product comprises one of a futures contract, an options contract or an option on futures contract.

13. The method according to claim 9 further comprising the step of trading the derivative product between participants prior to the step of comparing the traded information.

14. The method according to claim 9 further comprising the step of the provider designating a third party for comparing the traded information to at least one of the external natural peril event information and the index information, and for providing an indication of a matching outcome to the participants.

15. The system according to claim 9 wherein the derivative product comprises one of a futures contract, an options contract or an option on futures contract.

16. A method for conducting a financial activity between a provider and at least two participants, based on a natural peril event, comprising:

the provider defining a plurality of geographic regions for which the financial activity is to occur and in which a future natural peril event may occur;

the provider receiving natural peril event information from an external independent information source of such information;

the provider providing for each region, an index having an index value varying in response to one or more natural peril events;

the provider providing financial activity information to the participants, including information relating to the natural peril event information, the index, and the geographic regions;

the provider presenting to the participants at least one derivative product traded between the participants for each of the regions, the derivative product having a value that varies in response to the index and which is settled based on at least one of the external natural peril event information and the index information.

17. The method according to claim 16 wherein the step of presenting to the participants a plurality of geographic regions for which the financial activity is to occur includes the step of presenting a null region, available for trading, designating no natural peril event in any of the plurality of geographic regions.

18. The method according to claim 16 further comprising the step of the provider distributing a minimum amount of funds to be distributed to the participants receiving funds based on the matching outcome.

19. The method according to claim 16 wherein the derivative product comprises one of a futures contract, an options contract or an option on futures contract.

20. A system for conducting a financial activity based on a natural peril event, comprising:

a financial activity module for facilitating financial activity between a provider and at least two participants, for receiving natural peril event information from an external independent information source of such information and for providing financial activity information to the participants, including information relating to the natural peril event information and a plurality of geographic regions for which the financial activity is to occur and in which a future natural peril event may occur;

at least one communication module for communication between the financial activity module and an external independent information source for receiving the natural peril event information and for receiving index information including an index having an index value varying in response to one or more natural peril events;

the financial activity module presenting to the participants at least one derivative product to be traded between the participants, for a plurality of geographic regions, the derivative product having a value that varies in response to the index and which is settled based on at least one of the natural peril event information and the index information.

21. The system according to claim 20 wherein the communication module presents a null region, available for trading, designating no natural peril event in any of the plurality of geographic regions.

22. The system according to claim 20 wherein the derivative product comprises one of a futures contract, an options contract or an option on futures contract.

23. A system for conducting a financial activity based on a natural peril event, comprising:

a financial activity module for facilitating financial activity between a provider and at least two participants, for defining a plurality of geographic regions for which the financial activity is to occur and in which a future natural peril event may occur, for receiving natural peril event information from an external independent information source of such information and for providing financial activity information to the participants, including information relating to the natural peril event information and the geographic regions;

at least one communication module for communication between the financial activity module and an external independent information source for receiving the natural peril event information from at least one external independent information source;

the financial activity module providing index information including an index having an index value varying in response to one or more natural peril events;

the financial activity module presenting to the participants at least one derivative product to be traded between the participants, for a plurality of geographic regions, the derivative product having a value that varies in response to the index and which is settled based on at least one of the natural peril event information and the index information, and for providing an indication of a matching outcome to the participants.

24. The system according to claim 23 wherein the communication module presents a null region, available for trading, designating no tropical weather event in any of the plurality of geographic regions.

25. The system according to claim 23 wherein derivative products are provided for each of the geographic regions, with values depending at least in part on index values for each of the geographic regions.