Exposure to costs associated with the Canterbury earthquake may be very limited for the four major banks in New Zealand as third parties underwrite most of their business and general insurance products.For those holding personal home and contents insurance, the Earthquake Commission's insurance scheme will cover dwellings up to a maximum of NZ$100,000 plus GST and contents up to NZ$20,000 plus GST.The insurance exposure of banks is curbed by a condition of registration from the Reserve Bank of New Zealand that prevents their insurance business from exceeding one per cent of total consolidated assets.ANZ National's total insurance business comprised assets totalling NZ$349 million at last reporting date, which is 0.3 per cent of the total consolidated assets of the banking group. All of ANZ's business related insurance is underwritten by third parties including Lumley and Lloyds.Westpac NZ Banking Group conducts insurance business through its controlled subsidiary Westpac Life but that's restricted to life insurance and is underwritten by Westpac Group.  Westpac's general insurance products are fully underwritten by external third party insurers. The total insurance assets stood at NZ$116 million or 0.16 per cent of total assets.Bank of New Zealand says its banking group does not conduct any insurance business but markets and distributes insurance products of other entities. ASB also does not conduct any insurance business. While insurance losses for banks from the earthquake are very low, the impact on credit quality in businesses and also households in New Zealand's third largest city is difficult to gauge, and to some extent is a function of the business continuity plans and insurance held against business disruption (quite apart from insurance cover for physical damage to buildings, fittings and inventory).Turnover of many businesses in the city centre will be minimal, or even zero, this week and perhaps for much longer, while the safety of buildings is confirmed and demolition, where needed, begins.Impaired assets in New Zealand's banking sector tripled, to NZ$3.3 billion, over the course of the last full year surveyed by KPMG in their annual survey and have continued to climb since, albeit at a more modest pace.Banking sector assets in the district, if they were proportional to population, would be in the vicinity of NZ$40 billion.