The following first appeared on Marsh's disaster recoveryblog. Click here to read the original post.

The Bardarbunga volcano in Iceland continues to threateneruption, as meteorologists observe that although molten rock andother debris such as ash has not yet reached the earth's surface,“intense earthquake swarms” are moving the materials at aformidable rate.

Authorities in Iceland have raised the aviation warning toorange, the second highest on its scale, indicating that thevolcano is showing signs that it is increasingly likely to emit alarge ash cloud, similar to the one the country's Eyjafjallajökullvolcano released four years ago. The effects of the 2010 ash cloudwere seen far beyond Iceland, disrupting transportation throughoutEurope, stranding employees, and disrupting supply chains.

How to Prepare

• Review your current insurance policies with your brokerto ensure sufficient coverage. Policies often havedistance and time limitations defining where the damage must occurin a volcano scenario. Now is the time to have conversations withyour broker regarding what your policy covers and when.
• Consider supplementing your existing property insurancecoverage. Supply chain insurance provides an alternativeto traditional property policies, with coverage for both damage andnon-damage-related incidents affecting a named supply and namedsupplier (of a product or service). The trigger to these policiesis interruption to the production of the service due to supplyfailure.
• Review your corporate preparedness plans with yourexpert advisors. Previous volcano eruptions have affectedbusiness operations and the movement and availability of goods andpeople. If your corporate preparedness strategy and plans,including business continuity, supply chain, crisis management,etc., do not comprehensively address or mitigate potential impactsor have not been reviewed or tested recently, now is the time tospeak with your advisors.
• Make provisions for delays and storage. Asthere may be transportation delays or limited alternative options,collaborate with air cargo handlers to ensure availability ofcapacity, consider ways to store excess products as needed,determine if alternative production sites are a viable option, andreview contractual obligations with suppliers and key metrics suchas service level impacts between two parties (fill rates).
• Consider alternative routes to market. As itmay not be possible to move goods to delivery locations andcustomers using usual transportation means, consider alternativeones now so that you are not locked out of the market due to highdemand.

How to Respond if You are Affected

• Call your broker. In the event of a majordisruption, you will likely need the advice of insurance and riskmanagement advisors with a wide range of expertise, includingclaims, forensic accounting, corporate preparedness, and real-timecrisis management.
• Carefully track and document details. If aneruption affects flight operations, supply chain flows, revenue, orother business aspects, carefully track and document specificdetails, such as area closures by governmental authorities,advisories issued by aviation authorities, airport or airspaceclosures, NOTAMs (Notice to Airmen) issued, and any direct physicaldamage to owned property or property of customers or suppliers.This will assist in the accurate measurement and presentation ofclaims.
• Account for affected colleagues. Colleaguescould be stranded by an eruption, so ensure that human resourcespolicies for dealing with temporary absences are in place and wellunderstood at all levels, and that their roles and responsibilitiesare covered by others as needed.
• Activate alternative transportation and productionplans. Engage with contracted and alternativetransportation providers to determine capacity availability andtransportation timeframes. Move some activities to less impactedsites and/or where there is suitably experienced staff available,use a contracted workforce, or fulfill product demand viaoutsourcing to a competitor. Provide customers with early warningsof any problems and establish disruption resolution workflows.

To file a claim, please contact your client executive or claimadvisor.