IAG NZ will increase premiums after receiving 7000 claims from Christchurch earthquake victims, including one claim worth $NZ55 million ($42 million).

The insurer says most of the 7000 claims aren’t covered by Earthquake Commission (EQC) payouts, but has declined to reveal the source of the $NZ55 million claim.

Acting CEO Karl Armstrong told insuranceNEWS.com.au it’s too early to tell how much the premium rises – which will be phased in over the next two to three years – will be.

“Events of this nature are covered by reinsurance arrangements, but large events do have an impact on the future cost of reinsurance,” he said. “This unfortunately will have an impact on the insurance premiums customers pay.

“Any increases will be evenly shared, as offshore reinsurers assess risk on a global basis and view NZ as one market.”

Mr Armstrong told insuranceNEWS.com.au recent months have been “testing” for NZ, but IAG is “committed to helping people rebuild their lives and get back to business”.

“Canterbury’s earthquake and the atrocious weather that battered parts of the country with snow and floods over September have turned what had been a quiet winter into one of the worst in NZ’s history,” he said.

Mr Armstrong says it’s possible that up to a third of buildings in the Christchurch CBD could be underinsured for reinstatement.

“Many pre-1935 buildings may not have been acceptable by the majority of insurers for full replacement cover,” he said. “Often these buildings, which are normally built of reinforced masonry, would be insured on an indemnity value basis with a depreciated replacement.

“In these cases, building owners will need to find additional funds to repair their buildings.”