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MORE AT STAKE
THAN WINNING THE WORLD CUP
6 • Touchline • Issue 18
he World Cup and many other major
sporting events are an ideal opportunity
for manufacturers and retailers to
promote their products through offering
prizes or money back awards if a particular team
or individual achieves a pre-defined target. These
prizes or awards are often insured as contingency
events. Touchline spoke to Sportscover’s class
underwriter for contingency, David Boyle, to
find out more about the types of events and
promotions that he insures as well as the
insurance covering the event itself. He told us …….
“There are many different financial interests in the World Cup
and many organisations have a vested interest in the event
taking place and running smoothly, from the man selling
match day programs for the final featuring England and
Australia to the major corporate hospitality and overall event
organisers.
Sportscover has been working closely with its London brokers
looking at a range of risks for the World Cup since the
summer of last year, but this isn’t where it started. About 4
years ago the event organisers, FIFA and the local organising
committee were busy planning the event and calculating their
financial exposure should the unthinkable happen and the
event be cancelled or interrupted in some way. With this in
mind they approached the London market and in conjunction
with their broker and lead insurer panel (consisting of Munich
Re, Swiss Re and Hiscox) started to construct a policy based
on the standard event cancellation wording we use every day.
Being extremely experienced and sophisticated purchasers
of insurance the wording was altered over many months of
negotiation, removing exclusions and adding in extra cover.
With over USD $1bn being insured for this World Cup (less
than half its total cost) the premium was extremely large and
with this comes a great deal of leverage over the insurers
to get the coverage the organisers wanted whilst balancing
at the same time the massive amount of exposure that the
insurers had for this one event.
This type of event brokered into the contingency market is
known as a capacity risk. All of the insurers will have been
asked to put down their maximum line sizes or certainly a
lot larger than is normal for their day to day underwriting.
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