Insurance Australia Group (IAG) expects the final claim cost for earthquakes that hit Christchurch, New Zealand to increase by between $NZ750 million and $NZ1 billion ($A698.23 million and $A930.97 million).
IAG said the revised figures follow an increase in forecast repair and rebuild costs, the continued notification of new household claims that have exceeded the Earthquake Commission's $NZ100,000 limit, and a series of adverse court judgments which have impacted the insurance industry.
The Christchurch earthquakes of 2010 and 2011, also affected the Canterbury region of the South Island, the severest of which had a magnitude of 7.1 that struck on September 4, 2010.
IAG released its revised cost estimates in a statement to the Australian stock exchange on Tuesday.
It said a formal assessment of its costs position would be finalised in conjunction with its fiscal 2015 first half results, due for release on February 18.
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"In its commercial negotiations associated with its 2015 reinsurance program renewal, IAG has proceeded on the basis that the majority of this increase relates to the 22 February 2011 event, with claim costs now expected to exceed the previously notified $NZ3.25 billion ($A3.03 billion)," the insurer said.
That quake caused massive damage and killed 185 people.
IAG said that, at this stage, it believes it will finalise claims for the February 22, 2011 quake within its $NZ4 billion ($A3.72 billion) reinsurance limit.
IAG confirmed it was on track to deliver its full year insurance margin guidance of between 13.5 per cent and 15.5 per cent.
