Insuring against Olympic cancelation

in the design of the cover.

The key points in this regard are:

• Clarifying contractual liability issues in connection with TV rights, sponsoring, and ticket sales
• Factoring in the political risk (war, civil unrest, and terrorism)
• Natural catastrophes (earthquake, windstorm, flood)
• The experience of the host country in staging major events
• Envisaged security concepts
• Quality of the infrastructure
• Design of emergency plans

London’s specific challenges
Hosting the Olympics in London will bring different challenges to those posed in China four years ago. “In Beijing, natural catastrophe risks such as earthquakes concentrated insurers’ minds,” Duxbury told the Telegraph. “In London, flash flooding from summer storms could cause temporary disruption. However, issues such as terrorism are potentially much more serious.”

In addition to terrorism, London’s most obvious specific challenges center around the practical issues of travelling around the city.

U.K. authorities are experienced in counter-terrorism work and they will be supported by the international security network in analyzing the threats within the United Kingdom, but also those which are imported by any one of the 200 competing nations. Surprises are possible as was the case last summer when an outbreak of rioting and looting initially caught police and the authorities in London by surprise before being brought under control. It should be noted that several Olympic Official Test Events running in London at the same time were unaffected. The British government has pledged to spend £1 billion to ensure security at the Games, which accounts for 10 percent of the overall organizational costs.

Travelling within London at peak periods is often challenging and the extra load to the infrastructure placed on it by Olympic visitors will lead to delays. Many offices, including those of Munich Re, have contingency plans in place to maintain staff levels and operations during the Olympic period. Organizers have created special Olympic lanes on the busiest roads to ensure that officials and athletes are not delayed. Problems for spectators would be regrettable but an issue for the London Olympics reputation rather than the trigger for any potential insurance claim.

Munich Re says that all the parties involved, including insurers and reinsurers, will be watching the following weeks with considerable professional interest, “but with the interest of all stakeholders so closely aligned it is hard to see any other outcome than a hugely successful party atmosphere and ideally world record performances in many of the events!”

The preparation takes years
“The discussions with clients and their brokers begin many years before the actual event. With the backing of our tailored solutions, the organizers can offer a guarantee to stakeholders that their investment will not be lost if the Games cannot actually be held. Without this security, many companies would view a financial involvement as too risky”, explains Duxbury. “We have over 40 years experience as risk partners for these global events and have visited venues, spoken to consultants and organizers all over the world. The knowledge and experience gained has allowed us to take such a leading role in the London Olympics.”