An article on the Lloyd’s web site (www.lloyds.com) points out that there are “around 1,500 active volcanoes in the world and, although deadly eruptions are rare, they can cause devastation to people and property over a wide area, leaving huge economic losses.”
As an example Lloyd’s selected Mount Mayon, which overlooks the Philippine island of Luzon. Because of “her perfect conical shape and her habit of regularly reminding people of her potentially explosive power,” the mountain is “adored by volcanologists.
Mt. Mayon, which is 330kms (206 miles) south-east of the capital Manila, has erupted 48 times since records began, and could do so again at any time. The most violent eruption 1814 killed more than 1,200 people and devastated several towns. More recently, in December 2009, more than 30,000 people who live near Mount Mayon were moved to temporary shelters where they may have to stay for months.
Professor Bill McGuire, director & professor of geophysical hazards at the Aon Benfield UCL Hazard Research Centre, believes volcanoes pose a potentially catastrophic loss in some of the principal insurance markets around the world, threatening major cities such as Seattle on the US west coast and also Naples in Italy.
Naples has two active volcanoes – Vesuvius and Campi Flegrei,” Prof McGuire explained. “It’s a disaster waiting to happen. Either volcano could erupt anytime and Campi Flegrei is in the middle of an urban area.”
According to Dr Rashmin Gunasekera, a catastrophe risk analyst at Lloyd’s broker Willis Re, different volcanoes pose different threats. “In general the widest extent of damage in stratovolcanoes (like Mayon or Japan’s Mt Fuji) would be from ash, which could impact on property, agriculture, aviation and hotels in volcanic ski resorts for example,” Dr Gunasekera explained. “Ash could also result in respiratory illnesses,” he added.
Prof McGuire pointed out that lava flow is usually the least important risk as flows are slow and have limited range. “Fast moving pyroclastic flow is the most destructive. Then there is the danger of mudflows produced by heavy rains on volcanic ash,” he explained. “Plus volcanic ash can be carried several hundred miles, contaminating water supplies and electronics. Nearer the volcano the weight of ash can collapse roofs of buildings.”
An even bigger threat is an eruption large enough to affect the entire global weather system. This happened following the colossal eruption of the Indonesian volcano Tambora in 1815. Over 90,000 people died as a direct result of the eruption – but the 200 million tons of sulphur dioxide that entered the earth’s atmosphere limited the amount of sunlight getting through causing temperatures to plummet around the world for nearly a year.
There is, however, more of a chance today of gauging when a volcano may erupt. Scientists are getting better at assessing the precursory signals from volcanoes that help predict eruptions as well as the type of eruption. “Precursory signals for volcanoes include changes in geochemistry, geodesy (crustal motion) and frequency of volcanic tremor,” Dr Rashmin Gunasekera stated. “For volcanoes that are heavily monitored these signals provide information about the behavior of the volcano and therefore information that might be useful for warning purposes,” he added.
Forecasting is a different matter, Prof McGuire admits. “We can’t do much more than say ‘this is a volcano that erupts on average every 50 years, it hasn’t erupted for 55 years, so we expect something to happen’,” he explained.
Importantly for insurers it is still not possible to predict how big an eruption will be, how long it will go on for or when the climax will be, says Prof McGuire. Insurers usually define a natural catastrophe event as lasting no longer than 72 hours.
Following work carried out by Aon Benfield UCL Hazard Research Centre, an ‘hours clause’ of 672 hours is now used for volcanic eruptions: “That’s a month and it would cover most volcanic eruptions, reducing arguments about whether explosions are separate events,” Prof McGuire stated.
Source: Lloyd’s of London
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