First Quarter 2015 Edition
Although insurers represent a relatively small part of the derivatives markets, they are an interesting case study, in part because they report very detailed information about their derivatives positions and associated collateral in quarterly regulatory filings. The authors exploit these data to study how derivatives are used by insurers and analyze the likely impact of regulatory reforms on their business models.
The authors’ findings support the view that weather has a significant, but short-lived, effect on economic activity. Except for a few industries, which are affected importantly (such as utilities, construction, hospitality and to a lesser extent retail), the effect is not very big, so that even the fairly bad weather during the 2013–14 winter cannot account entirely for the weak economy during that period. Other factors must have been at play.