While much of the Northeast was unprepared for Sandy, the insurance industry had been preparing for it for years. Ever since Hurricane Andrew in 1992, the insurance industry has taken steps to protect itself against catastrophe losses, in conflict with the interests of its customers.
The industry’s principal tactic has been to draft policy provisions designed to curtail coverage. It has others, too: hiking premiums, refusing renewals in high-risk areas and delaying claims long enough to take advantage of the time value of money. Some companies also add “hurricane deductibles” or shift coverage to government-backed programs (such as the National Flood Insurance Program).