The timing of Sandy allowed for an immediate response of insurance executives as they spoke to analysts about third-quarter earnings. Several insurers have at the very least intimated that insured losses would be more than Eqecat's estimate—the highest of the insured-loss forecasts thus far.

Modeler AIR Worldwide has released an estimate of up to $15 billion. Endurance says insured losses of more than AIR's estimate are definitely possible. XL Group's leadership says insured losses will at least be at the higher end of modeling estimates.

Eqecat and AIR's estimates came out days after Sandy tore through the densely populated Northeast. Since then—even though much of the losses will be absorbed by the federal government's National Flood Insurance Program (storm surge is not covered by the private market)—it has been made clear that business interruption will play a large role in aggregate industry losses.

An estimate by Karen Clark & Co. would furthermore suggest predictions from Eqecat and AIR could be low. The founder of the modeling industry released an insured-loss estimate of $12 billion—for wind damage alone.

Modeler Risk Management Solutions has thus far stayed out of the Sandy insured-loss estimation game. RMS says too many important variables remain unknown—especially variables, such as power outages, which affect business interruption claims—to come up with a reliable estimate of insured losses from Superstorm Sandy at this time.

Additionally, according to Guy Carpenter, modelers assumed the use of hurricane deductibles in their estimates. However, regulators in affected states have ordered they not be applied since the storm was not technically a hurricane when it made landfall.

“Insured damage will be difficult to assess strictly within the models due to many factors, including but not limited to flood damage, particularly to subways and tunnels, causing potentially increased business interruption losses and even-cancellation losses,” says a recent Sandy report from Guy Carpenter. “Power outages may exacerbate residential and commercial time element losses.”

William Keogh, president of Eqecat has written PC360 to say Guy Carpenter was mistaken. The modeling firm did not use hurricane deductibles in calculating its estimated insured loss range for the industry, he says. The observed winds are too far below the deductible triggers, which are often set at Category 2 hurricane strength.

“For an event like Hurricane Sandy where the average damage to homeowners was less than 0.5 percent of total insured values (with great underlying variability), imposing [hurricane] deductibles from 2 percent to 5 percent versus the normal fire deductibles of $500 to $1000–sometimes up to 1%–could reduce the amount recovered by homeowners by more than half,” adds Tom Larsen, senior vice president, product architect at Eqecat, in an email. “This is a very hypothetical number because all of the insurance policy contracts would have to be re-written to include these higher deductibles.”