PT - JOURNAL ARTICLE AU - Paul U. Ali TI - The Legal Characterization of Weather Derivatives AID - 10.3905/jai.2004.439652 DP - 2004 Sep 30 TA - The Journal of Alternative Investments PG - 75--79 VI - 7 IP - 2 4099 - https://pm-research.com/content/7/2/75.short 4100 - https://pm-research.com/content/7/2/75.full AB - This article provides an explanation of the legal status of weather derivatives. The article examines the structure of payment obligations under a temperature derivative, the most common type of weather derivative, and the legal requirements for insurance products. The legal consensus to date has been that weather derivatives are not insurance products and that the providers of weather derivatives are not subject to regulation as insurers. That proposition was recently called into question by the U.S. National Association of Insurance Commissioners in a controversial paper released in late 2003 where it was stated that weather derivatives were, in fact, insurance products. This article argues that weather derivatives are only superficially similar to insurance products but cannot, on a strict legal analysis, be considered insurance products.