Suncorp-Metway Limited (ASX: SUN) and Insurance Australia Group Limited (ASX: IAG), two of New Zealand's largest insurance companies, are prepared for the expected property damage claims caused by Saturday's earthquake.

The IA Group expects the reinsurance arrangements with other insurers to cover the cost of damage claims, while Suncorp's reinsurance coverage would offset the cost of all damage claims following the 7.0 magnitude quake.

Initial assessments of the affected areas place the damage cost at around $1.6 billion. New Zealand Prime Minister John Key, however, disclosed it could be months before the full extent of the damage could be pegged.

Roads, bridges, and buildings took the brunt of the tremor. Only two serious injuries were reported to be related to the quake.

The New Zealand Institute of Geological and Nuclear Sciences (GNS) considers the likelihood of the recent quake to be the most damaging New Zealand earthquake since the magnitude 7.8 Hawke's Bay earthquake in 1931. Likewise, Risk Management Solutions (RMS), a global firm that provides catastrophe management services, described the Saturday morning quake as possibly the “largest insured loss in New Zealand in many years.”

The RMS is assessing all information the GNS and the U.S. Geological Survey (USGS). The first set of modeling parameters is expected to be released on 6 September.