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Major Hurricane Landfall

Trading Term

A major hurricane landfall occurs when the center of a tropical cyclone of Category 3 or higher on the Saffir-Simpson scale, meaning maximum sustained winds of at least 111 mph, crosses a coastline. The distinction matters economically because insured damage scales very steeply with wind speed, with empirical estimates suggesting losses rise roughly with the eighth power of maximum wind, so Category 3 and stronger events dominate the long-run loss budget despite being comparatively rare. Landfall definitions in contract terms must specify the crossing point and the region precisely, since a storm can make landfall more than once and a near miss can produce substantial damage without triggering a contract.

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