  Natural disasters, such as tornadoes, floods, and wildfire pose risks to life
and property, requiring the intervention of insurance corporations. One of the
most visible consequences of changing climate is an increase in the intensity
and frequency of extreme weather events. The relative strengths of these
disasters are far beyond the habitual seasonal maxima, often resulting in
subsequent increases in property losses. Thus, insurance policies should be
modified to endure increasingly volatile catastrophic weather events. We
propose a Natural Disasters Index (NDI) for the property losses caused by
natural disasters in the United States based on the "Storm Data" published by
the National Oceanic and Atmospheric Administration. The proposed NDI is an
attempt to construct a financial instrument for hedging the intrinsic risk. The
NDI is intended to forecast the degree of future risk that could forewarn the
insurers and corporations allowing them to transfer insurance risk to capital
market investors. This index could also be modified to other regions and
countries.
