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CHRISTCHURCH, New Zealand (Reuters)—The insurance industry faces damage claims of between $3.5 billion and $8 billion from Tuesday's devastating earthquake around Christchurch, New Zealand, catastrophe modeling firm AIR Worldwide Corp. said.
"The quake caused extensive damage in the city center and was the second major quake to strike the city in six months," Air Worldwide said in a statement on Wednesday.
"Damage assessments are only just beginning after the initial focus on search and rescue," said the firm, which uses computer models to generate fast loss estimates for insurers on events like earthquakes or hurricanes.
"Aftershocks, of which there have been several, remain a concern," it added.
Rescuers were pulling survivors out of rubble on Wednesday, 24 hours after the earthquake in Christchurch, as the death toll climbed to 75, with many dozens still trapped inside collapsed buildings.
Reinsurers Munich Reinsurance Co., Swiss Reinsurance Co. and Hannover Re Group, who help insurers cover big losses, took many weeks to provide damage estimates from an earthquake in New Zealand in September due to the difficulty of assessing structural damage to buildings.
This week's earthquake makes insurance adjusters' task even more complex as they will need to distinguish whether the damage is from the previous earthquake or a new claim.
Munich, Swiss and Hannover, the world's top three reinsurers, all said on Wednesday it was too early to estimate their hit from the latest quake.
Reinsurance price impact
Credit Suisse said in a note to clients that reinsurers were likely to take the largest share of the losses and that overall claims would probably be higher than the $3 billion to $4 billion estimated for September's earthquake.
Based on September's claims, Credit Suisse calculated the share of losses at around 15.3% for Munich Re, 7.7% for Swiss Re, 3.8% for Hannover Re and 5.3% for Amlin P.L.C., but cautioned that the estimates should be seen as a frame of reference rather than guidance.
The hit from this week's earthquake would be painful to digest in the first quarter but was not big enough to cause a global reinsurance prices to rise, the Swiss bank said.
"With continued high levels of excess capital in the global reinsurance industry the losses suffered to date are unlikely to be sufficient to cause a turn in global pricing, although we would expect pricing in the Asia-Pacific region to increase," Credit Suisse said.
Credit rating agency Standard & Poor's Corp. has said New Zealand's insurers would see pressure on earnings from this week's earthquake but they would be spared pressure on their credit ratings for now.
"The capital strength and extensive reinsurance protection of major general insurers would limit negative rating pressure at this stage," S&P said.