The three colours of the Icelandic Flag
symbolize the country and it's nature:
Blue symbolizes the sea
White symbolizes the glaciers
Red symbolizes the fire in the volcanoes
The modern flag was adopted in 1915,
after several years of struggle,
where Icelanders tried to have the "Hvítbláinn"
adopted as the National Flag.
That flag was similar to the modern Icelandic Flag,
but without the red cross in the center.
The Icelandic government considered the "Hvítbláinn"
to be too similar to the standard of the King of Greece.
The real reason may have been resistance from the Danes,
which had been offended by unauthorized use of the "Hvítbláinn".
The Danes also had connections to the Royal house of Greece.
For the first years of its existence the Icelandic Flag
was only flown in coastal waters,
as Iceland was part of the Kindom of Denmark,
and there was great resistance to the flag
here in Iceland, many people preferring the "Hvítbláinn",
but this has long ago been forgotten and the Icelandic people
love their flag, and would not change it for the world.