Munich Re estimates the annual market at $3-4 billion in the U.S., significantly lower in Australia, more than 1 billion euros in Europe, and $200-$400 million in Latin America, said Rupert Wimmer, senior originator at its Swiss subsidiary New Re.

"The insured risk volume in the weather market for reinsurers increases by around 5% to 10% each year," he told Reuters during this week's E-World trade fair.

"The main drivers are the rise of renewable energy in the electricity generation mix, and thus the necessity to take cover against volatile production and volatile power prices," he said, adding that New Re expects new customers to come from Britain, continental Europe, Australia and Latin America.

Munich Re competes with Swiss Re, Allianz and Japan's Sompo in a market where policy prices are individualised and there is little public data.

Typical products are call or put options and weather swaps, which allow commodities sales or purchases volumes at relatively fixed margins.

Operators can use these products to limit the impact of the vagaries of wind, speeds, heat, cold, solar intensity and precipitation.

Using Europe's stormy weather as an example, Wimmer said a utility might have produced and sold a lot of power from its turbines, but its thermal plants might have suffered from low power prices resulting from oversupply, while gas sales could also be curbed by mild weather.

Customers still taking 30-40 year averages as guidance might overlook global warming data from the more recent past, he added.

Meteorological data had become more reliable and inexpensive in recent years, giving contract parties independent knowledge on which to base deals.

Wimmer said transactions sometimes needed two to four years to be set up, adding: "We'd like to do more business with Germany's local utilities."

(Editing by Alexander Smith)

By Vera Eckert