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London, UK, April 15, 2010 - A major eruption of Italy's Mount Vesuvius could result in 8,000 fatalities, 13,000 serious injuries and total economic losses of more than $24 billion, according to a new study supported by the Willis Research Network (WRN) that puts Vesuvius at the top of the list of Europe’s 10 most dangerous volcanoes.

The WRN, funded by Willis Group Holdings (NYSE: WSH), the global insurance broker, is an industry-leading public-private partnership between Willis and many of the top scientific research institutions in the world.

The WRN volcano risk ranking, which examines European volcanoes with potentially affected populations of greater than 10,000, was developed by researchers from the University of Cambridge, the University of Naples Federico II and Willis Re, Willis’ reinsurance broking arm.

In the paper titled, “Insurance Risks From Volcanic Eruptions in Europe,” the researchers propose that the ranking be used as the basis for developing the first detailed insurance risk models for volcanoes in Europe and various European overseas territories. At present, no such models exist.

The WRN team identified the 10 most dangerous European volcanoes based on the size of a potential eruption, the number of people potentially at risk, and the value of property in the area surrounding each volcano. The study found that, together, the 10 volcanoes could affect almost 2.1 million people with an aggregated exposed residential property value of US $85 billion. The Eyjafjallajökull volcano in Iceland that erupted yesterday was not on the list, but the Hekla volcano, Iceland’s most active, was ranked as the ninth most dangerous volcano in Europe.

Vesuvius poses the greatest risk to life and property, the study found, because it has the highest exposed population (1.7 million people), the highest exposed residential property value (US $66.1 billion), and the greatest potential for a seriously damaging eruption among the top 10 volcanoes. The study noted that more than 87 percent of the aggregated exposed property value for the 10 volcanoes is concentrated in the Neapolitan region near Vesuvius and Campi Flegrei.

The WRN European volcano risk ranking below shows the number of people living in the area that could be affected by 25 cm of ash fall in the assumed greatest eruption. It also shows the total residential property value exposed to severe damage or destruction in that eruption, taking into account the total number of dwellings within possible reach of pyroclastic flows or 25 cm ash fall and their full current reconstruction cost. While the Caribbean volcano of Soufrière Saint Vincent is not on European soil, it has been included in the top 10 due to the significant impact that an eruption would have on European territory.

Dr. Rashmin Gunasekera, a Catastrophe Risk Analyst at Willis Re and one of the authors of the paper, said, “There are significant numbers of highly active volcanoes in the wider European region, taking into account those in Iceland, the Spanish Canary Islands, the Portuguese Azores and the French islands of the Lesser Antilles. These are all major tourist destinations, and while property values drive our loss estimates, it should be noted that aviation, agriculture, motor and business interruption policies also will be affected.”

WRN member Prof. Robin Spence, CURBE, University of Cambridge & CAR Ltd., and an author of the study, said, “Large explosive volcanic eruptions are rare events, but when they do occur, they have the potential to cause huge economic and human losses. In 2002, for example, rain combined with ash fall alone caused economic losses of around US $960 million after the eruption of Mount Etna in Sicily. In principle, however volcanic eruption is an insurable risk and our study concludes that the time has come for the development of an insurance risk model for European volcanoes to identify the scale of potential future impacts.”

The WRN team was made up of Dr. Gunasekera, Prof. Robin Spence and Prof. Giulio Zuccaro, Scientific Director, Plinius Centre, University of Naples Federico II.

Volcanic risk affects major metropolitan areas worldwide, including Tokyo (Mt. Fuji), Mexico City (Popocatépetl) and Auckland (Auckland Field). WRN officials said they expect their volcano risk methodology will prove to be valuable in assessing risk in these other areas beyond Europe and its territories.

Click here to read the full paper, “Insurance Risks From Volcanic Eruptions in Europe”.

The Willis Research Network (WRN) is focused on evaluating the frequency, severity and impact of major catastrophes — from flooding to hurricanes and earthquakes — and seeks to help society at local and global levels manage these risks and share the costs of these events via public and private sector approaches. To achieve this mission, Willis has teamed up with 32 leading institutions across a full range of disciplines from atmospheric science and climate statistics, to geography, hydrology and seismology, to assess the impacts on the environment via engineering, exposure analysis and Geographic Information Systems. Additional information can be found at www.willisresearchnetwork.com

Willis Group Holdings plc is a leading global insurance broker, developing and delivering professional insurance, reinsurance, risk management, financial and human resource consulting and actuarial services to corporations, public entities and institutions around the world. Willis has more than 400 offices in nearly 120 countries, with a global team of approximately 17,000 Associates serving clients in virtually every part of the world. Additional information on Willis may be found at www.willis.com.