Few could have foreseen the drama and controversy that awaited Japan after its Olympic ambitions were ignited by a 2013 bid successful in fending off competition from Spain and Turkey.
We’re just two months out from its already-postponed start date and the feeling among our extensive re/insurance industry contact base is that the Games will likely be cancelled.
56% of industry participants we approached expect there will be no Olympic Games in 2021, a percentage that has only grown higher in recent days as pressure from the world stage grows.
Though still fully unclear, this event’s cancellation would certainly stand as an extremely costly and disruptive loss event, in the wake of what has already proved a difficult 12 months.
At a loss of between $2 billion – $3 billion, cancellation of the event would drive the largest ever claim in the global event cancellation market, according to broker Gallagher.
As we wrote previously, reinsurance giant Swiss Re has a specific exposure of $250 million to the cancellation of the 2020 Tokyo Olympics, while one source previously told Reuters that Munich Re’s exposure is as high as $500 million, although this is unconfirmed.
Overall, analysts at Jefferies estimate that the Tokyo Olympics is insured for approximately $2 billion, with an additional $600 million for hospitality.
It’s understood that the IOC has an event cancellation policy in place worth around $800 million, which covers the majority of the $1 billion investment it makes in each city that hosts the games.
Furthermore, the local organising committee in Tokyo will have its own policy which is estimated at around $650 million, while broadcasters will also have some fairly sizeable insurance policies in place.
