Widespread reconstruction of Christchurch is “on hold” while aftershocks continue, Reserve Bank of New Zealand (RBNZ) Governor Alan Bollard says.

Dr Bollard said on Friday the availability of insurance has been an important factor in the timing of the rebuild.

“There are some unique or unusual aspects – for example CBD closure, building code changes, land remediation, damage on damage – which mean that assessing the value of claims is complex and takes time,” he said.

Dr Bollard told the Canterbury Employers’ Chamber of Commerce that recent aftershocks are likely to add to nominal insurance costs, “but the costs of the rebuilding in real terms may not be significantly affected; that is, you only rebuild a house once”.

The Earthquake Commission has categorised the December 23 event as an earthquake rather than an aftershock.

New Zealand has had more than 400 earthquakes and aftershocks measuring more than 4 on the Richter scale since the first earthquake in September 2010. More than 40 were rated greater than 5 on the scale.

Dr Bollard says the rebuild is expected to take more than five years but building damage is only part of the story, with soil liquefaction, cliff collapses and lateral spread (where soil moves towards water sources) all presenting major technical, insurance and economic problems for the rebuild.

The RBNZ estimates the total cost of claims could be around $NZ30 billion ($23 billion), including claims-handling expenses, business interruption claims, temporary accommodation and other costs not directly related to rebuilding.

He says although some insurers have faced problems and the industry remains cautious about writing new cover, shareholders, including foreign owners, are providing new capital to insurers.

“The Reserve Bank continues to monitor the effects on balance sheets in the insurance sector. Our focus is on the soundness of the sector, and so we are particularly interested in levels of existing and future catastrophe cover.”

Dr Bollard says higher global reinsurance costs are flowing through to New Zealand customers.