Insurers face largest ever loss if Tokyo Olympics canceled
The board of the International Olympic Committee (IOC) will meet this week to determine a course of action. Both the IOC and Japanese organizers have stated that a second postponement is out of the question after postponing the 2020 Tokyo Games by 12 months. From today’s perspective, a complete cancellation seems increasingly likely.
While the event cancellation insurance market has already had a huge impact on the COVID-19 pandemic, Simon Henderson, executive director at Gallagher, told Reuters that the Olympic Games cancellation “would be by far the biggest [loss]. “He said,” The Olympics are a world championship, it’s a tennis tournament, it’s an athletics tournament. It floats, all rolled into one – definitely a big headache. “
Jefferies analysts estimate the Tokyo Olympics will be insured for approximately $ 2 billion, plus another $ 600 million for hospitality.
Cancellation losses will come from multiple sources, not just from the IOC and the local organizing committee (with coverage of approximately $ 800 million and $ 650 million respectively), but also from broadcasters, sponsors, professional sports teams and the many others in the organization organizations involved games – many of which have already been able to claim some costs due to the postponement last year.
Tim Thornhill, director of Lloyd’s broker Tysers, told Reuters that there was “no rule of thumb” as to how much of the total insured value of an event could be claimed in the “postponement” section of an event cancellation. One thing is certain: if the Tokyo Olympics are canceled, the payouts will likely be much higher than those earmarked for the postponement.
According to Reuters, some of the insurers and reinsurers likely to take the biggest hits from a cancellation include Lloyd’s of London insurers, Munich Re (which allegedly has a $ 500 million exposure to the Tokyo Olympics) and Swiss Re (which has $ 250 million exposure).