One example of how Phoenix’s use of weather derivatives can positively affect your cost efficiency can be found in their innovative solution to cutting snow removal costs by as much as 50%.
Most companies contract for 1-2 years with a snow removal company and pay a fixed price for that service as opposed to a pay per event price. An arrangement that may provide you with budget certainty – but one that also leaves you paying higher than what the statistics would indicate as fair value.
But Phoenix Energy Solutions decided to do things differently.
Having statistically looked at snow removal costs, it became apparent that there is a better way to manage these costs. By correlating your individual properties/portfolio to specific weather stations and then having the snow removal companies agree on the metrics for charging the client, Phoenix Intelligence allows you to decrease the cost of your seasonal fixed snow removal budget by transferring the price risk from your snow removal provider to an A+ rated reinsurance company.
Why? With a lower cost of capital than the snow removal company, Phoenix’s reinsurance partner can write the risk at a rate that is actually fair – and significantly cheaper – than what the snow removal company can offer you directly. Working with the largest global firm to provide this protection, Phoenix Intelligence has the resources to manage risk in excess of $100M. Having helped manage risk for both large and small companies, Phoenix Intelligence is uniquely suited to optimize your energy efficiency like no other firm in the industry.