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Insurers face "astonishing" large loss if the Olympics are canceled



(Reuters) – Insurance companies face a $ 2-3 billion loss if the Tokyo Olympics are suspended this year, which is the largest demand ever on the global event-suspension market, brokers say.

With less than six months to go before the Games start, the competition will be at the top of the agenda when the International Olympic Committee (IOC) board meets this week.

The Olympic body, which will meet at a distance, is in a similar situation as in March last year, when it postponed the Games by 12 months when the COVID-19 pandemic shut down sports worldwide.

Much of Japan is now under a state of emergency due to a third wave of COVID-19 infections.

The IOC and Japanese organizers have been convinced that another launch is not an option. So it seems more likely that the games would have to be suspended, rather than postponed again, if they could not continue in Tokyo this summer.

Event interruption insurance companies have had a tough year as a result of the pandemic. with festivals, conferences and sporting events postponed or canceled worldwide. Broker Howden estimates the COVID-1

9 loss of event cancellation at $ 5-6 billion.

But the cancellation of the Olympics "would be by far the biggest – mind-blowingly", says Simon Henderson, CEO of broker Arthur J. Gallagher & Co.

"The Olympics are a world cup, it's a tennis tournament, it's an athletics tournament. It swims, all in one – definitely a huge headache.

Analysts at Jefferies have estimated that the Tokyo Olympics are insured for about $ 2 billion, plus another $ 600 million for hospitality.

The IOC raises about $ 800 million. protection for each summer game, which covers most of the approximately $ 1 billion investment it makes in each host city.

In addition, the local organizing committee in Tokyo will have issued an additional policy, estimated at about $ 650 million, while broadcasters are also insured for large sums.

"TV networks, sponsors, professional sports teams, entertainers and other organizations can all have cancellation policies that protect their interests in the Olympics," said Leigh Ann Rossi, chief operating officer of the broker NFP Sports and Entertainment Group.

Such a policy will have been purchased years in advance and would most likely cover cancellations due to infectious diseases. Cancellation policy for events taken during the past year excludes this cover.

Many of the organizations involved in the Olympics could have demanded certain

Tim Thornhill, a director at broker Tysers, said there was no rule of thumb on how much of the total insured value of an event could be required under the deferral section of an event cancellation policy.

But brokers expect that all a payments made last year for deferral would be less than all cancellation payments this year. Re and Swiss Re.

Munich Re has a $ 500 million exposure for the Tokyo Olympics, a source told Reuters earlier. Munich Re declined to comment.

Swiss Re has an exposure of $ 250 million, its CFO, John Dacey, told analysts last year.

The German insurer Allianz has signed an eight-year insurance contract with the IOC which entered into force. earlier this month, covering winter and summer games, including the Paris 2024 and Los Angeles 202 Summer Games. diseases, say brokers.

More insurance and risk management news about the coronavirus crisis here. Catalog

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