Data provided by iNet BFA
Loading...
See More

London Games insured for $5bn

Jul 25 2012 12:02 Sapa-dpa

Related Articles

Coe: London Olympics in 'killing zone'

Olympics a showcase for Britain

Olympics give Britain's economy a boost

BHP earmarks $1.2bn for Olympic Dam

London races to upgrade transport system

No 'Olympic' house prices

 
London - The worst-case scenario is expensive. Should the London Olympics be fatally disrupted by an act of terror, earthquake or flooding, around €4bn ($4.8bn) would go down the drain in commercial terms.

That at least is the estimate of leading reinsurer Munich Re, which has equated the value of a total Olympic collapse with that of a football World Cup. Munich Re is itself liable through various policies for around €350m.

These "Insurance Olympics" exceed the capacities of any one of the world's insurers. There are close to a dozen other global insurers carrying this huge risk.

"The biggest challenge is that sporting events of this size simply cannot be moved somewhere else on the spur of the moment," saidf Munich Re manager Andrew Duxbury.

"And not every country would be in a position to cope with a major earthquake as took place in China in 2008, months before the Beijing Games, and still be able to hold the Games as planned," Duxbury said.

There is more at stake than cancellation or postponement. Halting the Games halfway through, interruption and delay are also included in the calculations - along with accidents of all kinds.

Every Olympics has its own particular risks. In London's case it is the ever-present threat of terrorism and the more down-to-earth problem of getting around the British capital.

Evaluating the value of a policy is a complex undertaking, Duxbury said. The terrorist threat is countered by Britain's long experience in combating terrorism.

To this should be added the exceptional efforts being made by the state, which has made around €1.2bn available for security and comprehensive emergency plans.

On the second issue of local transport, there will certainly be major delays for spectators.

But the special "Olympic lanes" on the major routes to and from the stadium will ensure that members of the "Olympic family" - athletes and officials - will get there on time.

The insurance companies deal in the first instance with the London Organising Committee and also with the International Olympic Committee (IOC), sponsors and a wide range of companies involved, including travel agents and hotels, and most importantly television broadcasters.

The IOC has ensured its expected winnings from the London Games of at least $400m. The French IT company Atos has also taken out comprehensive coverage for its activities, which include transmission of results and other data.

And this is certainly true of US broadcaster NBC, which has bought the rights to the London Games from IOC for as much as $1.18bn.

Other broadcasters have also taken out insurance to cover themselves against losses resulting from anything untoward happening over the course of the Games.

There are also smaller policies for accidents and injury to athletes, for example.

But no one is divulging the precise details of the major insurance contracts, which remain closely guarded business secrets.

olympics 2012  |  london  |  insurance  |  floods  |  terror
NEXT ON FIN24X

 
 
 

Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
0 comments
Add your comment
Comment 0 characters remaining
 

Company Snapshot

We're talking about:

Small Business

A cash flow crunch often occurs in small businesses trying to balance cash coming in with cash going out. Watch this video to help you improve.
 
 

Passive investment for retirement

The use of passive investment products, like Exchange Traded Funds, to deliver low-cost investment performance is taking off.

 
 

Start saving...

Time the key for retirement saving
Dummy's guide to saving
Save money with affordable account
All about endowments

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...
Loading...