Hulda Ragnheidur Árnadóttir, director of the Natural Catastrophe Insurance of Iceland, told broadcaster RUV that more than 400 damage claims had come in so far from the fishing town of Grindavik.

Of those, 53 buildings have been declared a total loss, including 30 residential properties. More than 260 claims still need to be investigated.

The town of around 3700 inhabitants began to be evacuated in November following a string of earthquakes that was correctly seen as foreshadowing an eruption.

Fissures eventually emerged near Grindavik, causing hot lava and gas clouds to flow into the community in mid-January. For the first time in almost half a century, houses in Iceland were destroyed by masses of lava.

An estimated 6.5 million cubic metres of magma have now accumulated beneath the Svartsengi area, which includes Grindavík. Experts are fearing a major new eruption on the island in the North Atlantic.

As they face an uncertain future, a few hundred residents Grindavík were allowed to return for a few hours on Sunday to collect their belongings. A similar operation is planned for Monday.

– with AAP