Hurricane

View weather product codes

With three types of contracts for Hurricane futures and options – covering specific regional locations and actual named hurricanes, CME Group addresses the need for managing hurricane-related risk and recognizes the limited capacity in the insurance industry to insure customer claims. It provides a way to:

• Help insurers and others transfer risk to the capital markets
• Mitigate exposures for actual named hurricanes and specific regional locations
• Increase insurance capacity in order to insure customers or hedge businesses

Learn How to Electronically Submit CME Group Weather Blocks at www.cmegroup.com/pivot

Things to know:

• You can choose among 3 contract types:
  • Hurricane Event contracts – Covering specific regional locations and actual named hurricanes making landfall in the United States Atlantic basin
  • Hurricane Seasonal contracts – Focusing on the total number of hurricanes that occur within a specific location or geographic area between June 1 and November 30
  • Hurricane Seasonal Maximum contracts – Focusing on the largest hurricane to make landfall within a specific location or geographic region between June 1 and November 30
• Cat-In-A-Box refers to a geographical area that spans the coast from Galveston, Texas to Mobile, Alabama
• Contracts are cash-settled and trade electronically on the CME Globex platform
  • Accessible around the clock, around the world
  • Complete price transparency and anonymity
• Block trading available
• CME Clearing clears and settles all trades and guarantees counterparty creditworthiness with settlement 2 business days following expiration

About the Carvill Hurricane Index

Carvill’s ReAdvisory team created the Carvill Hurricane Index (CHI), which determines a numerical measure of the potential for damage from a hurricane, using publicly available data from the National Hurricane Center of the National Weather Service. The CHI incorporates many factors about the hurricane, such as sustained wind speed and the radius of hurricane force winds, and is a continuous measurement.

The commonly used Saffir-Simpson Hurricane Scale (SSHS) classifies hurricanes in categories from 1 to 5; however there are a number of features which make the scale less than optimal for use by the insurance community, and the public at large. For example, meteorologists have had to quantify SSHS categories as either ‘strong’ or ‘weak’ in order to make a proper distinction of a storm. As a case in point, Katrina was described as a weak category 4 storm at the time of its landfall but this did not provide a real estimate to the actual physical impact. And Hurricane Wilma in 2005 was at one point in its life the strongest storm on record. However, the CHI highlights that at its strongest, Hurricane Katrina had more potential for damage than Wilma, despite its lower wind speed, since Katrina was a far wider storm. The Saffir-Simpson scale would be unable to make this distinction clear.

Get more detailed information on the CHI at ReADvisory: Carvill Hurricane Index (PDF).