General Insurance Article - Olympics cancellation may cost insurance industry up to 3bn


Insurers and reinsurers will be on tenterhooks over the next six weeks as the Tokyo Olympics' opening nears, Bloomberg Intelligence says

 The International Olympic Committee (IOC) is committed to going ahead with the postponed 2020 Olympics, however, the IOC has taken out around $800 million in event-cancellation insurance, with additional cover purchased by the local organizing committee. Including broadcasters, sponsors, professional sports teams and hospitality, analysis from Bloomberg Intelligence estimate the insured cost of cancelling the event to be in the $2-$3 billion range.

 With the Olympic Games set to begin next month on July 23, insurance losses could be large if the Games are cancelled, as Japan faces emergency measures to contain Covid-19 infections. Swiss Re said last year that its direct Olympic exposure was $250 million (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, some of which may already have been reserved.

 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 $2-$3 billion 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. 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.
  

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