The New Zealand insurance industry is braced for costs in the hundreds of millions of dollars following Saturday’s devastating Christchurch earthquake.

Measuring 7.1 on the Richter scale, the quake has caused at least $NZ2 billion of damage to property and infrastructure.

Some 6000 claims are already being processed with many more expected to follow.

Insurance Council of NZ CEO Chris Ryan says it is still “too early to tell what the cost to the industry was going to be”, but says it “may run into the hundreds of millions”.

But there’s no concern about the industry’s ability to react quickly and effectively to the disaster. Mr Ryan told insuranceNEWS.com.au today the local industry is “perfectly well structured to cope with the claims”.

Prime Minister John Key says the NZ Government “faces a moral dilemma” in dealing with the non-insured and underinsured.

“Ultimately if you don’t have insurance and you don’t fit in the category of real hardship, then there’s no question there will be a cost,” he said.

While there will be assistance for people suffering hardship, Mr Key says some people are “going to find it a very distressing experience”.

“For everybody else, we’ll need to work our way through it.

“At the moment it appears there’s been an orderly approach to the earthquake,” he said. “We’re delighted there’s been no loss of life, although there has been substantial damage.”

Lumley NZ CEO John Lyon says early indications point to the earthquake being the country’s biggest insurance disaster.

“We have diverted a senior executive to be on the ground in Christchurch to co-ordinate the claims and we have extra staff from Auckland travelling down there,” he told insuranceNEWS.com.au.

Lumley has also told brokers that policies which have just expired or about to renew will be automatically extended.

With the centre of Christchurch badly damaged, Mr Lyon says a large number of commercial claims are expected, although he suspects people will be underinsured for business disruption due to the length of time before they will be able to resume normal trading.

IAG companies State Insurance and NZI are dominant in the NZ market, and CEO Mike Wilkins said from Sydney this morning the two companies have responded to more than 2000 calls already. But he says it’s still too early to determine the extent of damage.

“At this stage it is too early to determine the extent of damage to our customers’ property [but] we expect it is likely to be significant,” he said. “From a financial perspective, the entire event will be covered by our reinsurance arrangements.”

IAG says losses from any subsequent major event this year will be capped at $175 million and the quake will not affect this financial year’s results.

Suncorp subsidiary Vero NZ has deployed additional staff to cope with the disaster, and put resources on standby should they be required.

Executive GM Andrew Aitken says extra staff have been put in place to “help process claims and to help the settlement process”.

He says it will be some time before an accurate assessment of claims volumes and costs can be made, but anticipates Vero NZ’s financial exposure is likely to be limited due to the country’s statutory framework and the group’s “conservative reinsurance arrangements”.

The NZ Earthquake Commission provides the first layer of household cover in the event of a quake. This generally caps at $NZ100,000 ($79,000) per dwelling and $NZ20,000 ($16,000) for contents.

Loss adjusters across Australia and NZ are also being mobilised to move into Christchurch. McLarens Young MD Kerry Gupwell told insuranceNEWS.com.au claims are still coming in and will do for some time.

“We’ll have the chance to do an on-the-ground evaluation later today,” he said. “We can decide then how many people we need to assist. We’re well prepared for this kind of event.”