1766 in IcelandEvents in the year 1766 in Iceland.Incumbents Monarch: Frederick V ; Christian VII onwards Governor of Iceland: Otto von RantzauEvents Hekla erupted, producing the second largest lava flow, 1.3 km3 covering 65 km2, and third largest tephra volume, 0.24 km3, of any Icelandic volcano during the inhabited era. Holger Jacobaeus, a Danish merchant, constructed a large wooden house in Keflavík.