Olympics cancellation could cost insurers over £2bn

Insurers and reinsurers will be anxious in the six weeks leading up to the Tokyo Olympics, the International Olympic Committee having taken out the equivalent of £565m in event cancellation insurance, with additional cover purchased by the local organising committee.

While the IOC has stated its commitment to going ahead with the postponed 2020 Olympics, insurance losses could be large if the games are cancelled, amid emergency measures to contain COVID-19 infections in Japan.

Including broadcasters, sponsors, professional sports teams and hospitality, analysis from Bloomberg Intelligence estimates the insured cost of cancelling the event to be over £2bn.

Swiss Re said last year that its direct Olympic exposure was US$250m (or about 1% of net-earned premiums) and Munich Re hasn't specified, but it likely has exposure in the hundreds of millions of euros.

Charles Graham, senior industry analyst at Bloomberg Intelligence says: “Insurers and reinsurers will be on tenterhooks over the next six weeks as the Tokyo Olympics' opening nears, with any cancellation of the already postponed 2020 event potentially costing the sector US$2-US$3bn in aggregate, based on our calculations. That would hit an event cancellation industry already battered by record 2020 claims.”

Opposition in Japan to holding the Olympic Games may be easing, according to the latest polls, after the number of COVID-19 cases dropped. But medical opinion remains strongly opposed to the games taking place, with reports that Japanese corporate sponsors also favoured a postponement after international spectators were excluded. The IOC is focused on making the Games as safe as possible, with plans for daily testing and the vaccination of athletes, yet vaccination won't be compulsory. A decision on allowing spectators into venues will be taken later this month.

The Olympic Games are currently scheduled to begin on 23rd July.

    Share Story:

YOU MIGHT ALSO LIKE


Cyber physical risks
Property damage as a consequence of cyber attack is often excluded from standard property policies, but as the industrial internet of things expands, so too do the risks. This podcast examines the evolving threat landscape. Published October 2021

Financial institutions were early adopters of cyber security and insurance. Are they still on top of the game?
Managing huge amounts of sensitive data online makes financial institutions a prime target for hackers. As such, the sector was an early cohort for insurers in creating cyber cover. Since then, the market has evolved almost beyond recognition. It continues to challenge itself to this day, complying with rigorous regulatory demands and implementing avant-garde enhancements to keep abreast of the ever-changing risks. Published June 2021