As insurers and reinsurers prepare to manage the economic fallout from the one-year delay to the Tokyo Olympics, experts have suggested that the games will only go ahead in 2021 if there’s a vaccine for the COVID-19 coronavirus.
It was announced on March 24th that for the very first time, the Olympic games would be delayed by a year as a result of the significant global disruption being driven by the virus outbreak.
Prior to the confirmation of delay, it was revealed that both Swiss Re ($250mn) and Munich Re (reportedly around $300m) had large exposures to the cancellation of the Tokyo Olympics, with the International Olympic Committee (IOC) believed to have an event cancellation policy in place worth roughly $800 million.
As we discussed previously, it remains unclear if this cancellation coverage would payout in full for the postponement of the Olympics. It’s typical that such cover offers protection against both full cancellation and postponement, but at this time the terms of the IOC’s insurance contract remains uncertain.
However, a recent meeting between the IOC and Tokyo 2020 organisers reveals that COVID-19 could still result in the full cancellation of the games.
The rescheduled games are currently set to commence on the 23rd of July, 2021, but unless a vaccine for the virus has been developed and is affordable, available and effective, there’s a serious chance this delay could become a cancellation anyway.
This is according to Professor Sridhar, chair of global health at the University of Edinburgh, who told BBC Sport that the chance of the games going ahead in 2021 as planned all depends on whether or not a vaccine exists.
“We’re hearing from the scientists that this could be possible. I had thought it would be a year or a year and a half away but we’re hearing possibly this could come sooner.
“If we do get a vaccine within the next year then actually I think that (Olympics) is realistic. The vaccine will be the game-changer – an effective, affordable, available vaccine. If we don’t get a scientific breakthrough then I think that looks very unrealistic,” she explained.
While the terms of the IOC’s cancellation insurance cover will determine the payout it ultimately receives, either the postponement or full cancellation of the games is likely to result in a significant loss event for the global re/insurance industry.
The IOC and organisers of the games remain committed to both the Tokyo Olympics and Paralympics taking place next year, but the reality of the matter is that without a viable vaccine, this is unrealistic.