On October 29, 2012, when Hurricane Sandy made landfall along the northeast coast—a year to the day since the last northeastern superstorm and fourteen months since Hurricane Irene — the wind speeds recorded by the National Weather Service indicated the storm had diminished to “merely” a tropical storm.

Executive Summary

Research by Milliman shows that waiving wind deductibles will shift a notable portion of the losses to insurers and impose a cost to the insurance product that had not been factored into the deductible credits and thus, the charged premiums.

While this technical distinction between hurricane and tropical storm made little difference for the people unfortunate enough to be in the path of Sandy’s storm surge, it appears to have created significant financial implications for homeowners, businesses, and the property insurers who protect them.

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