The earth’s ring of fire
Local events, global consequences
Around 550 volcanoes around the world are believed to be active
In 2010, numerous flights were cancelled after an ash cloud spread over north and central Europe following the eruption of the Eyjafjallajökull volcano in Iceland
When volcanic eruptions are mentioned, many people think of lava, mud and pyroclastic flows, glowing clouds, ash eruptions and ash deposits. But these are just the local effects.
The indirect impact can be felt worldwide. In the case of the largest volcanic eruption in recent decades, that of Pinatubo in 1991, aerosol-forming sulphur dioxide molecules were projected into the upper atmosphere. As a result, the global average temperature in the year following the eruption fell by 0.5°C. This had major repercussions for agriculture.
Even when there is no serious property damage, ash clouds can paralyse air traffic across an entire continent. The reason is that rust and silicon particles can damage aircraft engines, with the result that air traffic needs to be shut down as a precaution.
Supervolcanoes — The invisible danger
Subterranean volcanoes without a cone – so-called supervolcanoes – are among the greatest of all natural hazards. Their gigantic magma chambers extend to depths of between 5 and 20 km.
Besides the Phlegraean Fields near Naples, there is a second supervolcano in Europe in the eastern Mediterranean close to the Greek island of Kos. The last eruption of the Phlegraean Fields occurred 35,000 years ago and was gigantic: it ejected between 50 and 100 times as much material as the Pinatubo eruption in 1991.
It is believed there are also supervolcanoes under New Zealand, Kamchatka, the Philippines, the Andes, in Central America, the USA, Indonesia and Japan. Any supervolcano eruption would have devastating consequences – both locally and globally. But supervolcanoes lie dormant for long periods – for tens to hundreds of thousands of years.
High risk for many conurbations
Size of the magma lake discovered 2001 under Vesuvius
Roughly 500 million people live close to volcanoes around the world – the majority of them in cities. One such example is Auckland in New Zealand. A probabilistic hazard study shows that the greatest danger for Auckland does not stem from the small volcanoes in its urban area, but from volcanoes – some of which are highly volatile – situated some 200 km southeast and 260 km south of the city. Following an eruption, the principal danger would be from ash deposits. Even with efficient early-warning systems, evacuation would present an enormous logistical challenge.
There is also a high risk for densely populated cities in Japan, such as Tokyo, Nagoya, Kyoto and Yokohama. Etna – the largest volcano in Europe – also caused serious damage when it erupted in 2001 and again in 2002/03. In 2002, the ash rain alone produced economic losses of around €800m.
Vesuvius, near Naples in Italy, erupts every 30 years or so. If there were an eruption on the scale of the one of 79 BCE, the property damage today would amount to approximately US$ 40bn. And only a tiny portion of this would be insured as things stand. There is disagreement over whether Vesuvius currently poses a threat. However, researchers’ concerns have increased recently after the 2001 discovery of a 400-km2 magma lake under Vesuvius. This supervolcano stretches as far as the hills of the Phlegraean Fields to the northwest of Naples, a region that is home to more than three million people. This means that the Phlegraean Fields are likely to pose an even greater threat to Naples than Vesuvius itself. They are a prime example of a supervolcano.
Loss potentials from volcanic eruptions
- Direct material losses, people killed or injured
- Devastation of coastal regions by tsunamis
- Shutdown of public life in large cities
- Impact on air and sea travel
- Supply chain problems (for example because of disruption to air traffic from volcanic ash)
- Crop failures; a layer of ash 1 cm thick is enough to wipe out a crop
- Global climate changes from the aerosol layers that are created after an eruption, which reflect a portion of solar radiation back into space, so that the temperature becomes cooler.
Global losses from volcanic eruptions 1980-2018
Overall losses: US$ 12bn
Insured losses: US$ 1.2bn
The challenge: risk assessment of volcanic eruptions
In principle, volcanic eruption is an insurable risk. Serious loss events on a global scale are rare occurrences, and volcanoes such as Vesuvius are carefully measured and monitored. But while an eruption would hardly come as a surprise, it would be impossible to estimate the strength. Volcanic eruptions can also trigger global disasters, such as the eruption of the Yellowstone volcano 630,000 years ago, when large parts of North America were covered in ash.
Up to now, the insurance industry has not systematically addressed extreme events like volcanic eruptions. Munich Re is collaborating with other organisations on building a global volcano model that will be able to model more accurately the financial consequences of volcanic eruptions, and thus contribute to developing meaningful prevention measures.
The need for such modelling was illustrated by the eruption of Eyjafjallajökull in Iceland in early 2010, which in a series of eruptions hurled enormous clouds of ash into the atmosphere. Air traffic over large parts of northern and central Europe was brought to a standstill in the weeks that followed. The consequences were significant: hundreds of thousands of passengers were stranded at airports, or were left unable to make their trips. After several days, a number of production companies also had to close down because material supplies could not be delivered due to supply chain disruption. The economic losses amounted to many hundreds of millions, or possibly even billions, of euros.