Global insurers face a heavy bill if the coronavirus forces the termination of the Olympic 2020 in Tokyo, with estimates of the cost of insuring the sporting showpiece running into billions of dollars. Japan has more than 200 cases of coronavirus, which has unhealthy more than 80,000 people worldwide and killed around 2,800, mostly in China.
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Prime Minister Shinzo Abe’s government has ordered recurrent sporting events lost as it tries to contain the prevalent but has pledged the Tokyo Olympic, in which Japan has financed some $12 billion, will go ahead as planned.
The worries persevere that the Games may be suspended, moved or even called off, a conclusion International Olympic Committee (IOC) member Dick Pound was defined this week as saying would need to be taken. Potential losses from canceling an event will generally be higher the later a conclusion is made, said Adrian Thomas, a director at insurance broker Aon (AON.N).
“If they have to stop 2-3 weeks before the event start-date, they have spent everything they have to apply. If you have three months to go before the event start-date, they have a casual to save some event costs,” Thomas said.
The IOC takes out around $800 million of defense for each Summer Games, which covers most of the roughly $1 billion investment it makes in each host city. Insurance sources projected it would pay a premium of about 2-3%, giving a bill of up to $24 million to confirm the Tokyo event. Allianz (ALVG.DE) has decided with the IOC to ensure the Olympic 2020 from 2021 to 2028 but its CEO said last week the German insurance giant had no contact with the Tokyo Games.
Munich Re (MUVGn.DE) board member Torsten Jeworrek said it was a wage-earner of dissolution insurance for Tokyo, for an amount in the hundreds of millions of euros. He would not say whether the number was more or less than its 250 million euro involvement to the 2018 Winter Olympic or if the policy covered coronavirus, citing privacy. Jefferies analysts approximate the projected cost of the Tokyo Olympic at $2 billion, including TV rights and sponsorship, plus $600 million for hospitality.
Lloyd’s insurer Beazley BEZG.L said in an infographic that event closure insurance for the 2014 and 2018 soccer World Cups covered possible losses of $1.25-1.5 billion. Beazley and Tokio Marine Kiln (TMK) are among Lloyd’s insurers to have protected or reinsured the Olympic in the past.
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