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Rapid Intensification

Trading Term

Rapid intensification is a rise in a tropical cyclone’s maximum sustained winds of at least 35 mph within 24 hours. It is one of the harder aspects of hurricane behavior to forecast, and disagreement between models about whether it will occur is a common source of large divergence in landfall intensity forecasts and therefore in the probabilities implied by landfall contracts. Because insured damage scales very steeply with wind speed, a single rapid intensification event shortly before landfall can move an outcome across a contract threshold and move expected losses by a large multiple.

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