TY - JOUR T1 - The Legal Characterization of Weather Derivatives JF - The Journal of Alternative Investments SP - 75 LP - 79 DO - 10.3905/jai.2004.439652 VL - 7 IS - 2 AU - Paul U. Ali Y1 - 2004/09/30 UR - https://pm-research.com/content/7/2/75.abstract N2 - This article provides an explanation of the legal status of weather derivatives. The article examines the structure of payment obligations under a temperature derivative, the most common type of weather derivative, and the legal requirements for insurance products. The legal consensus to date has been that weather derivatives are not insurance products and that the providers of weather derivatives are not subject to regulation as insurers. That proposition was recently called into question by the U.S. National Association of Insurance Commissioners in a controversial paper released in late 2003 where it was stated that weather derivatives were, in fact, insurance products. This article argues that weather derivatives are only superficially similar to insurance products but cannot, on a strict legal analysis, be considered insurance products. ER -