Bitter Cold UK Temperatures Triggers Cash Payouts to Pensioners and Needy

 

Exciting example of the use of a weather-backed insurance program to offset the costs associated with severe or disruptive weather.  I don't know the structure of this specific program, but it seems to work like a vanilla weather derivative -- for the price of a premium, the government is able to fund emergency actions related to specific weather events.  

Payout for the "insurance" occurs automatically when the event occurs.  In the case of the UK example, payout (25 GBP per eligible person) happens when the temperature remains below 0 C for seven days. Expect to see more of these kind of programs in the future.

Record Cold Weather Payouts Triggered as Temperature Hits -11C

Cold weather payouts for pensioners and the vulnerable reached record levels today after Britain’s deep freeze plunged temperatures as low as minus 11C. Forecasters warned that tonight will be even colder.

The Government’s bill will rise over £100 million as Londoners become eligible for the payment for the first time since the scheme was introduced a decade ago.

This morning, the thermometer reached minus 10C in Farnborough, Hampshire and minus 11C in parts of Scotland, which is colder than areas of Greenland and the Antarctic. The Met Office said it expected temperatures to go another degree colder tonight.

The weather will be good news for some people as more than four million vulnerable people are now eligible for a £25 cold weather payout. The payment is triggered when the average temperature in a district remains below zero for seven days.

The cold weather payment, which goes to pensioners, severely disabled people and families on benefits with a young or severely disabled child, was trebled this year from £8.50.

James Purnell, Work and Pensions Secretary, said: “We don’t want people to worry about turning up their heating when it’s cold.”

A £15 million payout now expected for people in London comes on top of 3.7 million payments totalling £93 million already triggered this winter at 48 of the country’s 76 weather stations, from Bedford in south-east England to Aviemore in the Scottish Highlands.

Photo courtesy of: BrotherMagneto