Fitch Ratings estimates the initial insured loss from the Christchurch earthquake to be between $1.5 billion and $6.0 billion, although the agency expects the impact on the major Australian insurers to be limited by their catastrophe reinsurance coverage, along with cover from the Earthquake Commission.

Gross loss exposures are expected to be significant for Insurance Australia Group (IAG) and Suncorp-Metway Limited (Suncorp), which between them have combined market share of 60%, Fitch said.

However, reported net exposures are low: $60 million for Suncorp, and negligible for IAG. Fitch said that counterparty exposure will be mitigated through sound credit quality within each group's reinsurance programmes.

Fitch believes the availability and cost of catastrophe cover from reinsurers will suffer, following the increased frequency of large losses in recent years. Australian insurers are still counting the costs of storms in Melbourne and Perth in March this year.