Finance Minister Bill English says the Earthquake Commission has sufficient funds and "reinsurance" to cover claims stemming from yesterday's earthquake, which looks likely to be even more costly than last September's disaster.
"We are covered for this as a separate earthquake because the reinsurance was put in place after the last ones," Mr English said yesterday.
"My advice is that it is a new event. That means that the Government reinsurance was back in place and any claims would be regarded as new claims."
But there would be "any number of more significant issues that arise because of the nature of this event".
He said the Earthquake Commission (EQC) had already been liquidating some of its assets after last year's quake.
However, the EQC should be able to handle the impact of the latest quake even though initial indications were the damage is far more serious.
"It will be a longer-term issue, not a shorter-term one."
The EQC is liable for the first $1.5 billion of the cost of claims for damage to residential properties resulting from an earthquake. Above that level, it has a further $2.5 billion in "reinsurance" cover - effectively insurance it takes out with large overseas companies. However, if total claims exceed $4 billion, the EQC will have to dip back into its own reserves.
Those reserves stood at $5.6 billion before last year's quakes, which would have reduced them by about $1.5 billion, leaving the EQC with just over $4 billion to cover claims from yesterday's quake. Claims from last year's quake and its aftershocks generated between $2.75 billion and $3.5 billion worth of claims.
Damage to Christchurch's infrastructure was estimated to cost around $460 million to fix, with hundreds of millions more in damage to commercial buildings covered by private insurers.
Yesterday, Mr English said he'd had no particular advice on the likely cost of the quake.
"Look, I think the cost is going to be large and those costs in this case won't all be covered by insurance. You've just got huge disruption, significantly more disruption particularly in the business area of Christchurch. That's why we'll be having Cabinet [this morning] starting to look at those issues."
A special Cabinet committee meeting would also be held tomorrow.By Adam Bennett Email Adam