RACHEL MARTIN, HOST:
This is WEEKEND EDITION from NPR News. I'm Rachel Martin. Electricity has been restored to Lower Manhattan for the first time since Superstorm Sandy. But gas is still in short supply all around New York and other parts of the Northeast. And to make matters worse, it's getting cold. The National Weather Service says temperatures in some storm-ravaged areas still without power could fall into the 30s. Today, runners from around the world were supposed to take part in the New York City Marathon, but the race was canceled late Friday after a lot of criticism that the event would be a drain on resources and an affront to residents affected by the storm. Superstorm Sandy is the latest in a string of natural disasters to hit the U.S. in the last couple of years. There have been wildfires, tornadoes, floods and derechos. And insurance companies are on the hook to pay billions in related claims. This is how State Farm spokesman David Beigie put it.
DAVID BEIGIE: We're seeing more of everything, and what we're doing is trying to just factor that in going forward as we work with others to try to have a better sense of what the future holds.
MARTIN: NPR's Yuki Noguchi reports on how insurance companies are now assessing future risks.
YUKI NOGUCHI, BYLINE: Here is one thing the industry agrees is true: The cost from hurricane damages is increasing. That's largely because population density and the cost of coastal property increases every year. But on the question of whether insurers expect to see more frequent and more intense weather events in coming years, that's where opinions diverge. Peter Hoppe heads the Geo Risks Research Center for Munich Re, a global company that insures other insurers. His company put out a report just before Sandy warning that North America will face a rising number of natural catastrophes in part due to greenhouse gas emissions.
PETER HOPPE: We believe that climate change is a big problem and will drive the losses in the future.
NOGUCHI: Hoppe says there is no evidence climate change caused Hurricane Sandy. But, he says, it doesn't matter whether insurers believe in man-made climate change or not. His report says the number of weather-related events nearly quintupled in North America over the past three decades. And that means premiums will increase in the long run if exposure also continues to increase.
HOPPE: On the long term, definitely we have an interest in what will be happening in 50 years, or even in 100 years because this concerns our business model in general. It may be that things become uninsurable.
NOGUCHI: But this is not a view embraced by the whole industry. Karen Clark, a longtime expert, runs her own risk-management consultancy.
KAREN CLARK: Are we really seeing more storms, or are we just recording more storms over time? That's the big question.
NOGUCHI: Clark says the problem is hurricane prediction is a very young science. She notes there are only records documenting hurricanes going back about a century, a data set far too small to draw big conclusions. She says after Hurricane Katrina - the most expensive of all documented storms - some predicted a warming cycle would produce more powerful storms. That forecast did not bear out.
CLARK: It just shows you that we just are not that smart, you know, when it comes to what's really going on.
NOGUCHI: Bill Keogh is president of Eqecat, one of the major risk-modeling firms in the U.S. He says despite what it may seem, we are now in a statistically low period of hurricane activity. After Katrina, few powerful hurricanes have made landfall in the U.S. That is not to say Sandy won't change how insurance companies assess their weather risks.
BILL KEOGH: Risk models change all the time, and they change when we have new information.
NOGUCHI: Especially when that information is unusual. And Sandy was unusual because it hit the Northeast, as few hurricanes do, and because it veered inland, instead of toward the ocean. That information from Sandy, Keogh says, will shape views about the probability of future risks. But probability is not the same as a crystal-ball prediction.
KEOGH: Everybody wants to know: Tell me the answer. You know, over the next five years, how many hurricanes will we have, what will they look like, how will much they cost, and when will they occur? So, we don't do that.
NOGUCHI: The only thing we can do, insurers say, is build our buildings safer, and better prepare for what will eventually come. Yuki Noguchi, NPR News, Washington.