Icelandic officials are preparing for a possible volcanic eruption following a “seismic swarm” that has seen the Reykjanes Peninsula be hit by about 1,400 earthquakes in 24 hours. 

As part of the nation’s efforts to protect its infrastructure from geothermal activity, Iceland has passed a new law that establishes a tax of 0.08 per cent of a property’s fire insurance valuation on all homes for a reported duration of three years.

The bill is expected to raise almost 1bn ISK (£5.7m) in revenue, which will fund the construction of lava barriers and other protections – including dikes, embankments and canals – around Svartsengi, a geothermal power station 65km from the capital Reykjavík. The power station is the main supplier of water and electricity to the Reykjanes Peninsula – the same region that recently suffered the earthquakes.

The area surrounding Svartsengi is known for its high geothermal activity. During the weekend, Grindavík, a fishing town with...