Event: Eyjafjallajokull eruption, Iceland, 2010
Location: Worldwide
Economic cost: $4.7bn in global GDP losses, including $1.4bn to airlines.
Description: An eruption from 14 April to 21 May 2010 released 250 million cubic metres of volcanic material into the atmosphere. Although the eruption itself was relatively small, its ash cloud created the greatest air travel disruption since the Second World War.
Damage: The ash cloud caused the cancellation of 48% of flights to and from Europe in the eight days from 15 to 22 April 2010, leaving more than ten million people stranded or unable to board flights. The broader economic impact was widespread. For example, fresh flower and vegetable export industries in Africa lost around $65m, while domestic Korean companies wrote off $112m during the height of the crisis due to disruption to the supply of electrical and machinery parts.
Insight: The Eyjafjallajokull eruption caused problems far beyond the scope of traditional volcano insurance. Some travel insurance policies contained a volcanic exclusion, but in 2011 the UK’s Financial Ombudsman Service ruled that this could not be used, describing the ash cloud as a “poor weather condition”.
Insurance solutions: The Lloyd's market offers cover in relation to Volcano. Examples of this include but are not limited to: Property catastrophe reinsurance, commercial property, workers' compensation, professional indemnity, public liability, insurance linked securities (including collateralised catastrophe reinsurance and catastrophe bonds), damage and non-damage business interruption and contingent business interruption, travel insurance.
Image: An ash cloud spews from the crater of Eyjafjallajokull in Iceland on its way to continental Europe, 2010 (Getty Images)
Sources: European Commission; Oxford Economics; World Bank
