If Sandy's losses fall at the high end of the new insured-loss range from RMS, the superstorm would only trail 2005's Hurricane Katrina ($46.6 billion) on a list of the costliest hurricanes in U.S. history. 

That is, if Sandy is included on the list at all: According to the National Weather Service, Sandy technically wasn't a hurricane when it made landfall.

O'Donnell went on to say he did not believe Sandy was an altogether unique event, adding that he fully expects to see further Sandy-like losses “in our lifetime.”

In the months prior to Sandy, rate increases were primarily being driven by international losses and updates made to RMS' hurricane model. Those drivers have “fully played out,” he added, leaving Sandy as the key topic of conversation during Jan. 1 renewals.

O'Donnell said the losses wrought by Sandy will be “well-controlled” by the insurance and reinsurance industries, but rates may be affected by uncertainties and emotion.

Confusion over wind vs. water losses, as well as Business Interruption losses, will cause further uncertainty as to a final-loss figure. The fact that Sandy is the second significant storm to strike the Northeast in as many years—and that hurricane deductibles didn't apply for either—will guide future conversations over pricing and terms and conditions.

Modeler Eqecat has released two insured-loss estimates for Sandy: The first was released before the superstorm made landfall, at which time losses were forecast at up to $10 billion. Several days later, Eqecat doubled that estimate to up to $20 billion.

Modeler AIR Worldwide released its own estimate of up to $15 billion.

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 further 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 (see page 8).

Another factor that may affect the validity of cat modelers' initial estimates: According to Guy Carpenter, some 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.