Numerous scientific studies suggest that climate change is already disrupting normal weather patterns and intensifying natural disasters like wildfires and hurricanes.
Nick Cavanaugh, chief executive of Santa Monica-based Sensible Weather Co., maintains that a rising level of climate risk is a reality that both consumers and businesses will have to adjust to when making decisions about how to spend their money.
“It’s really the only way to build resilience across a changing climate,” said Cavanaugh. “We can’t be caught off guard financially by these potentially massively damaging events.”
A climate scientist by training, Cavanaugh founded Sensible Weather in 2019. The company uses climate-modeling technology to provide inclement weather insurance to travelers visiting theme parks, campgrounds and other locations where a thunderstorm or a sudden snow flurry might force a quick change of plans.
“Consumer travel is a gigantic market, but it’s also very impacted by weather,” said Cavanaugh. “If it rains or there’s other weather that’s going to impact (a consumer’s) activity, we automatically send them a notification that they’re going to get a refund.”
Rainy days are nothing new, Cavanaugh noted, but as climate patterns change, it’s likely that the travel industry will experience more disruptions. Ski resorts may experience weeks of scorching winter temperatures—as theme parks in Florida brace for a longer hurricane season.
In response, Sensible Weather structures its partnerships differently depending on the particular needs of the individual company. Some, said Cavanaugh, may want to mark up the cost of inclement weather insurance as an additional source of revenue. Others may pass along the wholesale price to the consumer to alleviate customer concerns about weather.
“Those partners generally have a core customer service problem,” said Cavanaugh, referring to companies in the latter group. “When it rains on a Saturday at the theme park, customers complain.”
Cavanaugh said the travel industry was a logical place to apply the climate-modeling system developed by Sensible Weather, but that the company’s proprietary technology has a wide range of potential applications that could be tapped in the future.
“The platform we’ve built is use-case agnostic,” Cavanaugh said.Cavanaugh said the company is exploring the possibility of rolling out a coverage option for businesses to complement the “weather guarantees” it already sells to consumers. Sensible Weather could also expand to other industries susceptible to major weather-related disruptions, such as shipping, agriculture and energy, Cavanaugh said.
A recent influx of capital should help the company scale its current operations and potentially expand its scope. Sensible Weather announced May 4 that it had raised $12 million in a Series A funding round led by Infinity Ventures.
Cavanaugh said the funding would primarily be used to hire new employees that can help the company attract new partners and expand its product offerings.
In the few years since Sensible Weather launched, he said, the need for climate risk assessment has become even more obvious, and the company faces competition from a range of other startups focused on addressing similar problems.
“Eventually there’s going to be a much larger market for this—whether it’s analytics or insurance,” said Cavanaugh, noting that improved climate risk assessment could provide a needed shakeup to the insurance industry as a whole.