Sensible Weather - Big Data for a Rainy Day
Weather Insurtech
Have you seen the below video from 2014? Give it a quick watch, promise it’s worth the 30 seconds.
Weather gets in the way of our lives each and every day (pun intended per above lol).
People dread the idea of it raining on their wedding day. I get pretty irritated when I book a beach vacation and it rains the whole time. You can’t go skiing if it’s a white-out, boating if the water is rough, paragliding if it’s windy, etc.
Sometimes, I don’t even book things in the first place because I’m concerned about the weather…
I don’t think I’m alone - weather is unpredictable and there’s nothing we can do to stop mother nature from robbing us of our booked experiences (and hard-earned dollars) when she feels like it…
Or is there…
Sensible Weather, a Santa Monica-based startup, which provides insurance coverage for bad weather on in-trip experiences, raised $12M in Series A funding led by Infinity Ventures with participation from Certares Ventures, Derive Ventures, Wonder Ventures and Group1001. Executives from Airbnb, Pacaso, Plaid and Toast also participated. They previously raised $4 million in seed funding back in January of 2022. Sensible has previously received funding from National Science Foundation grants. Sensible Weather is super intriguing to me…
Using the power of data, Sensible analyzes massive weather datasets from satellites, ships, and other global weather pattern data in order to predict storms, weather advisories, and more. The data goes back several decades on an hourly basis from around the world, enabling them to predict hourly weather at any given location. Sensible then creates policies that travel and experience providers can sell to their travelers that offer reimbursements in the case of poor weather. For 3-10% of the booking cost, you can purchase a Weather Guarantee for travel reservations, ticketed events, and experiences. Weather conditions that are covered could include things like rain, unusual temperatures, and adverse conditions, but the policies can vary by location, time of year, and more.
[Sensible is] a sign that all the talk about "big data" is delivering useful products at last.
Let’s look at an example of this. Per their website:
You’re going on a 3 day weekend trip to Miami and book a hotel that costs $250 per night. The hotel you’re staying at offers a weather guarantee that you can add to your stay. In this example, the guarantee costs $11 per night to add (exact guarantee costs depend on the location, time of year, and what’s covered. They are generally between 3-10% percent of the booking cost).
The guarantee says that you’ll be reimbursed ahead of time for your night’s stay if it is forecasted to rain for more than two hours between 8am and 8pm the next day.
This is just one example of a “Weather Guarantee”. It is important to note, that travelers should read through and understand the terms and conditions associated with each policy that is offered. For example in the above Weather Guarantee,
reimbursed refers just to the cost of the hotel stay;
rain refers to “greater than 1 millimeter/rain per hour”;
two hours refers to two non-consecutive hours of rain;
ahead of time means the decision to pay out the claim is determined based on the forecast on the *morning of your stay*
Clearly, reading is key.
But this can revolutionize our travel experience as consumers! What an interesting and unique idea. So many experiences that individuals book are totally weather dependent. A bit of rain, fog, snow, hail, sleet, etc. can ruin any great day. And it’s hard to justify a large expense (or many) if you think there’s even a small chance of weather might play a role! Purchasing coverage and getting paid out for your experience in real-time, precisely when you are feeling the pain of disappointing weather means that you have the opportunity to audible plans and feel better about your money spent…
Travel / experience companies, who are the customers here, can easily integrate with Sensible Weather’s platform to offer these policies to their end-users. How does Sensible help travel providers? Well simply, it improves accessibility and comfort for their customers.
If you had to choose between two resorts in Mallorca, Spain - one that had no Weather Guarantee, and another that did, which would you feel more comfortable booking with? Probably the one that offered you a Weather Guarantee. Convenience means comfortability, confidence, and peace of mind which means greater conversion. This is evidenced by the fact that
Weather Guarantees have five times the conversion of traditional travel insurance.
-Sensible Weather
Partnering with Sensible also opens up the travel provider to an entirely new revenue stream, with all of the logistics and details of policies handled directly by Sensible. Most importantly, Sensible pretty much guarantees a memorable and positive travel experience. If a customer purchases a Weather Guarantee and mother nature behaves poorly, your customers will be paid before they are impacted, without paperwork, haggling, or claims.
Sensible is a truly fascinating idea, whose dataset will grow in value and power with every incremental minute of weather info.
As a result of climate change, weather patterns all over the world have become increasingly unpredictable. As the planet continues to feel the effects, along with an increase in purchased travel insurance in recent years, Sensible will be well-positioned to benefit from a world where consumers need more certainty when booking travel. And it provides more accessibility to the space in general!
Other competitors in the weather-related trip-cancellation segment include Pattern Insurance Services, an insur-tech company founded in 2020 and based in Palo Alto.
Where Sensible is an intriguing concept and would have an interesting go at offering this solution to travel vendors worldwide, to me it feels like a prime M&A opportunity for online travel agencies (OTAs) or experiences marketplaces. For example, OTAs like Expedia, Booking.com and Tripadvisor could acquire Sensible and utilize the tech to provide hotel accommodations and experiences with Weather Guarantees. Additionally, experience marketplaces like Viator (a subsidiary of Tripadvisor) and GetYourGuide could utilize Sensible to provide these policies to the experience vendors on their platforms, opening them and their vendors up to more revenue opportunities.
So what?
Well, Sensible Weather is a no-brainer to integrate with your customer offering if you are a vendor providing stays / experiences to consumers. You’re providing a more flexible, accessible, and convenient option than your peers and doing so with little risk to you. Vendors get higher conversions and a competitive margin on the insurance add-on. Importantly, if a Weather Guarantee is eligible to be paid out to a customer, Sensible pays out, not the vendor.
At it’s heart though, Sensible is an insurance company. The risks Sensible faces are similar to the risks most insurance companies face. They need to charge high enough premiums and hope for low claim rates. Except that’s what Sensible’s special sauce is for the consumer: there is no need to file a claim. Customers with Weather Guarantees are paid out automatically.
As for the rest of their risk profile, Sensible takes a large percentage cut of every Weather Guarantee “insurance plan” that is purchased from the vendor. If customers aren’t purchasing Weather Guarantees, there is nothing for Sensible to take a cut of. So they are exposed at the top line in times of lower travel (future pandemics / society shutdowns).
Additionally, consumers still may not be enticed to purchase Weather Guarantees. Whether the terms and conditions are too convoluted, payout is difficult / complicated, the insurance plan is too expensive, or more, Sensible is fighting an uphill battle where some people may just prefer to roll the dice. Many older individuals are self-insured, some people may prefer to travel without insurance, and some may not even want to have to go thru the claims process or read the small T&C!
I am yet to purchase any type of travel / event insurance (even though I definitely should) for a few of these very reasons. That being said, if I was offered a full payout for a hotel stay for a reasonable amount on a weekend I couldn’t stand to have ruined with an easy claim process? Man, I’d probably consider it…
Sensible is a product that is worthwhile to younger generations, who navigate websites and product terms with ease, and who may get more satisfaction out of knowing they have a backup plan, even for just a small % of their stay.
Taking a pause
I’m currently taking a vacation with my family and a few friends through Sardinia and Corsica. The wifi has been spotty so it’s been tough to write but really nice to just shut off from the rest of the world as well. Have had far less pasta than I had forecasted but the calories are getting to me all the same. It’s truly stunning here and I’m trying to sear every landscape, sunset, and second of the Mediterranean into my memory so I never forget it.
I gave a toast at dinner about how now more than ever I have been trying to be ever more present in each moment in my life.
If you take nothing else from today’s short piece and you’ve made it this far, take a moment now to appreciate the people, environment, and moment that you have surrounded yourself with, and be grateful for it. We move so quickly in our lives and get so easily distracted, there’s so much all around us to be thankful for and appreciate.
Photos speak more than a thousand words, here especially, so here’s a few:
GW