NZ's largest insurer counts Kaikoura earthquake costs

State Insurance owner IAG says claims from the Kaikoura earthquakes are likely to run into the hundreds of millions of dollars for it. Photo/Stuart Munro.

New Zealand's largest general insurer says the Kaikoura quakes is likely to cost it hundreds of million of dollars but it is too soon to say what the impact on its bottom line will be.

IAG which owns the AMI, State Insurance, NZI and Lumley Insurance brands has already received 1500 claims.

IAG New Zealand chief executive Craig Olsen said it anticipated that number would continue to grow as people assessed the damage to their property.

"It's too early to determine the full costs, it's not going to be in the 10s of millions it's more like the hundreds of millions," he said.

Around one third of its claims relate to commercial properties with two-thirds residential.

Olsen said it had moved quickly to get it's people on the ground assessing the damage and had set up an office with six people working from it out of Kaikoura last week after ensuring its people would be safe to work there.

Olsen, who visited Kaikoura, Marlborough and Wellington the week after the major Kaikoura quake hit said he had been impressed by the resilience of the local communities and how quickly people had come together to help out.

IAG has several hundred people working out of its Wellington office in Willis Street as well as branches of AMI throughout the city.

Olsen said its offices had performed extremely well and staff were able to get back into the building as soon as engineers had checked it.

The company was now putting in place measures learned in the wake of the Canterbury earthquakes.

"For us the immediate lessons were in how to mobilise people. To spend time understanding the needs of the community."

He said the Kaikoura quakes did not have the same scale or complexities as those experienced in Christchurch.

"Christchurch was much more complex. The ability to get in...the liquefaction."

The Kaikoura quakes had affected an area that was more spread out but the company was able to get in and do assessments much more easily.

It had also learned how to work more collaboratively with EQC.

After the Canterbury earthquakes the insurance industry had a massive shake-up with all house insurance policies moving to a sum insured amount.

Prior to that insurers paid out whatever was required to replace the damaged property - putting an unknown quantity on the potential cost.

Olsen said it was too early to tell if the move to sum insured would be an issue for claims this time around.

"Certainly there are going to be examples where it hasn't been worked through properly."

After the Canterbury quakes consumers also had to swallow the bitter pill of premium increases.

On whether premiums would rise again as a result of the recent quakes Olsen said the company would continue to provide affordable policies.

IAG is about to re-do its reinsurance programme.

Olsen said he was confident the company would continue to be able to get reinsurance despite the recent quakes.

"We have got very good relationships with the reinsurers. But it will be interesting to see whether it will have an impact on price."

IAG New Zealand made an insurance profit of A$135m in the year to June 30.

Olsen said it was too early to make any comments on what impact the quakes might have on its profits this year.

"We are seeing some claims where we thought the exposure was much higher and now we have got assessors in it is lower."

But there would be others that went the other way too, he said.