While one industry representative blasted states’ decisions to bar insurers from invoking hurricane deductibles after superstorm Sandy as an act of “political expediency” that will result in higher rates, another says he believes the state officials “acted within the letter of the law.”

Jimi Grande, senior vice president, federal and political affairs for the National Association of Mutual Insurance Companies, says, “The uncertainty created as politicians or bureaucrats simply change the rules makes providing coverage more difficult and expensive for everyone.”

Furthermore, he says that “basing these decisions on a ruling from the National Weather Service—a ruling process with no transparency—only adds to the uncertainty.”

Grande adds, “In the face of billions of dollars in claims, insurers need to know that their contracts will stand up and are not subject to arbitrary decision making.”

Ten states have made the call to disallow hurricane deductibles after the storm: Connecticut, Delaware, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, Rhode Island, Vermont and West Virginia.

Don Griffin, vice president of personal lines at the Property and Casualty Insurers Association of America, says PCI, after conducting a study, has determined that regulators acted in accordance with the law.

“Based on what we’ve seen, they have followed the law,” Griffin says.

He declined to comment directly on Grande’s statement, but said, “Deductibles do help keep the product available and affordable. One of the concerns is how they will be treated going forward.”

In this case, states acted to deny the hurricane exemption based on a decision by the National Weather Service just before Sandy’s landfall to change its designation from a hurricane to an “extra tropical cyclone.”

Industry officials contend the NWS acted despite the fact that Sandy had all the characteristics of a hurricane, which would have triggered the deductible.

In his statement, Grande says state officials “undoubtedly mean well, but they don’t understand that what they think is helping consumers will ultimately hurt them in the long run by distorting the market.”

He says that instead rejecting deductibles, “politicians—local and federal—could do far more for the communities affected by Sandy by focusing their efforts on not only rebuilding, but preparing for the next disaster.

“One way to do so is by focusing on mitigation efforts, including stronger building codes that make our homes, offices and other structures more durable during a storm.”

He adds, “It is a shame that it can take a tragedy, but hopefully we can use this disaster to highlight the need for mitigation and not actions that distort markets. Otherwise coverage for those who need it most will become harder to find and more expensive to provide.”

Grande called Sandy “the largest natural disaster since Hurricane Katrina.”

Griffin was loathe to make an estimate of the losses, noting that anecdotal evidence from PCI member-companies indicated that many were still having difficulty getting their personnel to hard-hit areas.

Insurance companies are already taking a hit from Sandy. Chubb Corp, which is based in northern New Jersey and is a major player in the U.S. northeast, suspended share buybacks because it is unsure how large its losses will be from Superstorm Sandy.

Credit Suisse analysts said the reaction to the Chubb decision by stock markets indicates that a Sandy loss of more than $30 billion is being factored into the stock prices of property and casualty insurers and reinsurers.

Sandler O’Neill analysts projected the total loss to insurers from the storm at $20 billion.