Insurance Cover for the London Olympics
“Glamour” is hardly the first word that comes to mind when talk turns to the work of an insurance broker, but almost every profession has its moment on the world stage. For brokers involved in covering the games, the 2012 London Olympics might be seen as a chance to capture some reflected glory. In the end, though, the experience is all in a day's work for many brokers.
Robert Barron, Assistant Vice President of Lockton, a private broker in London, certainly sees it that way. It may be a big event, he said, but “it ultimately gets looked at the same way as small risk business.” He told Insurance Business that, despite the Olympics’ size and despite the fact that the Games are spread over many locations, “it is just an event like any other.”
Barron acknowledged that the London location does give brokers an advantage, one that stems simply from the proximity of insurers. He also raised the issue of cancellation insurance, one type of cover recommended by the Olympic Committee’s own broker, Marsh. The importance of that coverage was underscored by the natural disaster that preceded the 2011 Rugby World Cup, hosted by New Zealand. Approximately one year before World Cup play was scheduled to begin, an earthquake damaged the stadium in Christchurch that was slated to host seven games. Those games had to be relocated, but the tournament was able to proceed.
In addition to cancellation insurance, Marsh recommended a full menu of coverage for businesses that could be adversely affected by disruptions related to the Games. In addition to cancellation risk, Marsh advised that businesses insure against non-appearance, the unexpected cost of prizes, over-redemption of product promotions and the cost of performance-based sponsorship contracts. In all of its recommendations, it emphasized the importance of managing exposure by limiting the potential cost of known risks.
At Aon Risk Solutions, Director Lori Shaw saw reason to be optimistic about capacity. She did not think that bringing the Olympic Games to a large city like London brought exceptional risk on the basis of geography. It did, however, mean that the host city was a densely populated area that contains an inevitable abundance of insureds. That circumstance, regardless of location, tests the willingness of insurers to take on large shares of the risk.
According to Shaw, however, the situation has improved in recent years. Speaking to Insurance Business, Shaw said, “Capacity is always a problem close to the event. You pay a premium for it. That said, capacity is better now than it was post-9/11, especially on the issue of terrorism.”