History of NTÍ
Iceland's Natural Disaster Insurance was operational on 1 September 1975 under Act No. 52/1975, at which time the agency was called Icelandic Penal Insurance. On 1 July 2018, an amendment to Act No. 55/1992 took effect, changing the name of the agency to the Icelandic Natural Disaster Insurance (NTÍ). There had been a long debate over the importance of establishing some kind of fund or insurance company to cover the costs that might arise from a major natural disaster in Iceland.
The eruption in Heimaey on 23 January 1973, and a deadly avalanche that hit Neskaupstaður on 20 December 1974, brought this idea into effect. As early as 30 December 1974, the Minister of Social Security appointed a committee composed of Ásgeir Ólafsson, the director of the Icelandic Brunswick Compensation Company, Benedikt Sigurjónsson, a Supreme Court judge and Bjarni Þórðarson, an actuary to “propose a system of compulsory insurance that compensates for damage to buildings and movable property caused by natural disasters”. They were also commissioned to prepare a bill to legislate for such insurance. Ásgeir Ólafsson chaired the committee. The committee drafted a bill on the Icelandic Penal Insurance Act, which entered into force on 27 May 1975.
Iceland's contingency insurance took over the assets and liabilities of the Icelandic Penal Fund, which was established at the time of the eruption in the Westman Islands and also compensated for damage caused in the avalanche at Neskaupstaður. The contingency fund ceased its operations in 1978. In particular, according to the report of the first Act prepared by the Committee, the purpose of establishing a special natural disaster insurance was "to be prepared in advance with financial means and rules on how to compensate for damage to property caused by natural disasters, while ensuring that everyone is on the same footing in this respect".