The Earthquake Commission (EQC) will have more short-term securities close at hand to quickly settle claims, Finance Minister Bill English says.
About 53,000 claims for damaged homes from the Canterbury earthquake have gone to the EQC and it was expecting to receive 100,000, costing between $1 billion to $2b.
The cost will be covered by the natural disaster fund, which holds about $6b in cash, shares and government bonds, and has an additional $2.5b in reinsurance.
Mr English told Parliament as EQC prepared to pay out claims resulting from the most expensive natural disaster in New Zealand history, it would be able to keep a wider range of short-term securities, such as cash and bank bills, and up to $2b in worth, rather than the previous limit of $250m.
Provisions would remain in place for a year, he said.
"The Earthquake Commission has been allowed to hold sufficient cash to meet the costs of what has actually been quite a significant number of natural disasters over recent years," he said.
"The most expensive of these was the (1987) Bay of Plenty earthquake, where the total cost to insurers, converted into today's dollars, was about $330 million.
"Treasury estimates that the cost to the Earthquake Commission and other insurers will be about 10 times that amount ($4b), and that is why it is necessary that the commission is able to sell down the assets that it holds in the natural disaster fund."
EQC chief financial officer Phillip Jacques said it would gradually be selling assets, such as global equities to pay for the first $1.5b of claims, before its $2.5b reinsurance kicked-in.
About 25,000 of the 53,000-plus claims were expected to be for superficial or contents damage of less than $10,000, another 14,000 would be for damage to chimneys and many more would be for serious structure damage.
Earthquake Recovery Minister Gerry Brownlee yesterday said EQC assessors began contacting people with smaller claims and "we would expect some cheques will be in the mail this week".
"For houses where the damage is greater than $100,000 (the maximum amount payable by EQC) we would expect to have more information later in the week," Mr Brownlee said.
He also said those claiming for ruined chimneys would be able to go to the Energy Efficiency and Conservation Authority (ECCA) and take the opportunity to put in a clean heating appliance.
Cantabrians who had a significantly damaged chimney could replace it with a new "efficient heater" and the cost would be part of the EQC settlement for their claim.
Mr Brownlee has also confirmed that Cantabrians affected by the earthquake will have late payment penalties to the Inland Revenue Department (IRD) waived where appropriate.