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Chicago Exchange To Launch Hurricane Futures

File image of hurricane Wilma (2005 season), using infrared imagery.
by Staff Writers
Chicago (AFP) Feb 14, 2007
The Chicago Mercantile Exchange said Wednesday that it plans to offer hurricane futures contracts to interested market participants wishing to place bets on future weather patterns. The financial center said the new hurricane futures contracts will help the insurance industry and other market participants to spread the risks of large storms. The exchange said its CME-Carvill Hurricane Index futures and options on futures contracts would be launched on March 12.

"Following the devastating 2005 hurricane season that caused an estimated 79 billion dollars in damage, it became apparent that there was limited capacity to insure customer claims," said Felix Carabello, the CME's director of Alternative Investment Products.

"With these hurricane contracts, insurers and others will be able to transfer their risk to the capital markets and thereby increase their capacity to insure customers," Carabello said.

The launch of the new contract comes as some insurance industry executives are warning that climate change is likely to trigger more frequent large hurricanes in coming years.

The US' largest home insurers, State Farm and Allstate, have decided not to seek new business along wide stretches of the East Coast because of fears that climate change will unleash more volatile storms.

Source: Agence France-Presse

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Indonesia To Relocate Key Railway Threatened By Mud Volcano
Jakarta (AFP) Feb 13, 2007
A key railway line threatened by a massive "mud volcano" which has forced thousands of people to flee their homes on the Indonesian island of Java will be relocated, officials said Tuesday. A gas well near Surabaya in East Java operated by PT Lapindo Brantas has spewed steaming mud since May last year, submerging villages, factories and fields. The advancing sea of mud is now threatening to swamp the railway connecting Indonesia's second largest city Surabaya with Malang and Banyuwangi.

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