In Brief

By Julie Rawe

BLUE-SKY INVESTING Your mutual-fund manager may start betting on the weather, literally. This month two energy firms are expected to issue some $100 million in "weather bonds," whose returns are based solely on average temperatures. These new bonds, rated in the BB range, allow weather-sensitive businesses--utilities, ski resorts--to hedge against losses caused by extreme temperatures. If Mother Nature behaves, holders can expect 10% to 30% returns; but a mild winter or scorching summer could melt profits and principal. On another front, the Chicago Mercantile Exchange started trading weather futures in September. Along with pork bellies, plungers can now bet on the average monthly temperature in New York City, Atlanta, Chicago and Cincinnati. The forecast for this winter: La Nina is out; Joe Average is in.

FRONT-SEAT DRIVER For the past 14 months, Progressive, the country's fifth-largest auto insurer, has been testing an optional pay-as-you-go system in Texas, using black boxes to track drivers' activity, including when and where they are going, via satellite. Monthly invoices are based on actual usage--the less you drive, the less you pay--and so far, Houston drivers have saved an average of 25% on their premiums. Progressive plans to launch the program in other states in the near future. Privacy advocates are concerned that despite safeguards, the information could by used against a driver in criminal and civil lawsuits.

HACKER INSURANCE With hackers seemingly able to break into even the most secure systems at big corporations, small businesses have been reluctant to take orders and credit-card payments online--fewer than a third of them do. But where there's fear, there's opportunity. A handful of insurance companies offer antihacker policies to small companies. For $1,500 a year, INSUREtrust.com covers up to $5 million for hacker-induced losses, including third-party lawsuits. Similar policies are offered by Evanston Insurance Co. and Lloyd's of London. Alas, none of these policies will bail you out when you crash your own system.

--By Julie Rawe