Tokyo Olympics Could Cost $400 Million For Reinsurers
ith the Tokyo Olympics going ahead without the presence of fans, refunds for tickets and hospitality packages could cost reinsurers up to $400 million.
After a lot of uncertainty surrounding whether spectators would be allowed to attend, the decision for the Tokyo Olympic Games to be held without fans was announced on July 9 after Tokyo declared another state of emergency.
Credit ratings, commentary and research organisation, Fitch Ratings report the cancellation of the Tokyo Olympic Games would have been the “largest ever insured losses from a single event cancellation,” but even with the event going ahead, the refund costs are high.
Fitch estimate reinsurers will have to pay between $300 million – $400 million (AUD $403 million – $537 million) in refunds, however “this is only 10%-15% of the amount reinsurers would have faced had the Olympics been cancelled.”
The majority of the refunds are for tickets and hospitality packages purchased in anticipation of the event.
According to Fitch, the total insurance cover for the Tokyo Olympic Games cost approximately $2.5 billion (AUD $3.4 billion).
The International Olympic Committee taking out $1.4 billion (AUD $1.9 billion), $800 million (AUD $1 billion) by broadcasters and $300 million (AUD $403 million) from other parties.
Fitch report the pandemic has shown the insurance industry how a “single trigger” can cause mass cancelations and as such they are rethinking some of the cover they offer.
“The pandemic has led the insurance market to generally stop offering cover for losses resulting from communicable diseases, although cover for event cancellation due to other causes is still available as before.
“We believe cyber risk could give rise to the next widespread catastrophe losses triggered by a single event, which could lead insurers and reinsurers to rethink the cyber cover they provide,” Fitch state.
With the upcoming Los Angeles 2028 Olympic Games currently in the market, Sportico report “disease and cyber security will likely be two of the major concerns for the insurance industry.”