English questions $6b quake insurance estimate

Finance Minister Bill English is questioning the credibility of an estimate of up to $6 billion in the insurance bill for the Christchurch earthquakes on Monday.

US-based insurance adviser Eqecat has estimated Monday's 6.3-magntiude shake was expected to cause an additional $US3b to $US5b ($NZ3.7b to $NZ6.1b) in insured losses to the region.

The figure is on top of the $15b to $20b costs already estimated for the September and fatal February quakes.

Mr English said he had seen no basis for "a large number like that".

"These aren't insurance assessments -- these are an offshore consultant having a stab at what it might be from the pictures on TV, so I don't think we should give it too much credibility," he said.

"The engineers are having a look now whether there's any new damage, but it does look as if most of the damage has occurred in places where there was already damage."

Mr English said the true picture would become clearer in the next few weeks, but the focus now was on getting relevant information to allow rebuilding and recovery to continue.

He denied New Zealand was now too risky to reinsurers.

"I think we've all had a bit of a knee-jerk reaction to this last earthquake but over time these things settle down.

"There's no doubt that the series of earthquakes change the perception of risk in New Zealand for the foreseeable future and we're all going to have to deal with that reality."

The track record around the world after disasters was that insurers reacted with a heightened sense of risk, he said.

"After a while that tails off and this last earthquake has made that a bit more likely, that the reinsurance industry will be jumpier in the short term, but in the long term that should settle out."

Any extra Government borrowing would depend on the decisions being made on what would happen to damaged land, he said.

Eqecat said the earthquake was not expected to cause significant damage to buildings undamaged by February's quake but would cause incremental damage and loss.

If Monday's quake had happened immediately after the February quake the amount of energy released would have been the equivalent of about a 0.1 magnitude increase, and probably an additional $US1b to $US2b in insured losses.

However, because it was almost four months later the cost was much higher as the damage was to buildings and infrastructure that had since been repaired, it said.