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Over 1 billion people – or one in every seven persons on the planet – watched when Germany took on Argentina in the 2014 football World Cup final. The spectacular numbers allow FIFA, the sport’s governing body, to proclaim the quadrennial event “the greatest show on Earth”.
In terms of visitors, worldwide audience and prize money – $400 million, no less – the World Cup outstrips the other great show on Earth: the Olympics. It’s not just the support of passionate fans that makes these events possible. Big or small, international or local, sporting events have an even bigger supporter - insurance. In fact, you can call it the ‘enabler’.
“Without insurance there would be no World Cup, no Olympics or little organized competitive sport at all,” says Michael Furtschegger, Head of Entertainment International at Allianz Global Corporate & Specialty (AGCS). “For, few would take on the risk required to stage an event, particularly one the size of the World Cup.”
Given the scale of the event, its insurance needs are also spectacular. For this World Cup, FIFA has earmarked $134 million alone for insurance for clubs whose players get injured – more than a quarter of the prize money on offer to the 32 competing teams.
This is just the tip of the iceberg. By the time Messi, Ronaldo & Co take to the field on one of the 12 venues in Russia, almost every aspect will be covered. “In terms of insurance, the World Cup is not significantly different to the Olympics,” says Furtschegger, who assesses the risks of massive music concerts and tours, sports or corporate events and develops tailored insurance policies for the organizations involved.
The World Cup and the Olympics are always on the radar. Staging either is an enormous risk for both the host country and organizers. The final bill for Russia is expected to be around $11.8 billion, excluding some new stadiums and costly infrastructure. There is also big money at stake from companies: advertising, broadcasting rights and sponsorship.
The cost of cancellation or postponement due to a natural catastrophe, infrastructure failure or a terror attack is great. Both Russia and FIFA have insurance that pays out if a game is abandoned or moved to another location, or if the World Cup is canceled.
While the World Cup has yet to be disrupted, an outbreak of foot-and-mouth disease in 2001 caused several Six Nations rugby games to be postponed. In 2011, an earthquake hit Christchurch in New Zealand, forcing eight games of the Rugby World Cup scheduled for later that year to be shifted. Organizers were forced to offer ticketholders either refunds or new tickets at the other venues, hurting revenue. Here, contingency insurance protected against the fallout.
Among those who buy covers for such events are broadcasters, sponsors, travel firms, airlines and retailers. Lloyds estimates the total insurance for the 2010 World Cup in South Africa at $9 billion - $4.8 billion for stadiums and training venues and $4.2 billion for linked business opportunities.
Some of these opportunities you wouldn’t even think of, says Furtschegger. "Take telecast rights. If the opening ceremony is delayed even by a few minutes by something as simple as transmission failure, that could affect the broadcasters because they've got advertising slots in place. There are insurance solutions covering such an interruption.”
When the opening game starts between host Russia and Saudi Arabia on June 14, everything from the stadium and Lionel Messi’s legs (rumored to be covered for 750 million euros) to the ticket in a fan’s hand will be insured in some form. Many fans will also have individual travel and health cover. The main difference between the World Cup and other insurable events, says Furtschegger, is the value of the teams. Ahead of the 2014 World Cup, Lloyds estimated the total collective insurable value of the competing teams at 7.7 billion euros. Protection for the players comes on top of the other covers.
Player insurance is an example of how the insurance needs to trickle down through the various levels at such events, says Furtschegger. “FIFA has an insurance program to cover injury to the players, payable to the national teams; the national teams themselves have insurance, such as liability and personal accident insurance for their players, while the players can have their own cover to protect their earnings.”
Among other covers are fleet insurances (which cover team vehicles) and bonus payments insurance (for national associations to cover contract bonus payments if an underrated team unexpectedly becomes world champion).
Despite being the most political in history, the World Cup in Russia has only slightly elevated risk compared with similar events. “Since the 1972 Munich Olympics, you always have the risk of terrorism and this is only marginally higher given the political dimensions of Russia’s involvement in Syria and in the disputed Caucasus region (home to one of the host cities, Rostov-on-Don),” Furtschegger elaborates.
The risk of cyber terrorism, which was also a feature at the Sochi Winter Olympics in South Korea, also has to be considered. But perhaps the biggest individual risk, is hooliganism. “Euro 2016 was marred by brawling of English and Russian fans,” says Furtschegger. “While the Russian authorities have promised to tighten security, it cannot be discounted, so traveling fans are advised to have good international health and travel insurance.”
With the safety nets in place, it’s time for kickoff!
Allianz helps insure FIFA as well as the 2018 World Cup and partners with various national teams, including the current champions, Germany. Through its subsidiary in Russia, Allianz has also partnered with the government to insure infrastructure and stadiums, as well as liability programs. Allianz also offers health and travel insurance to fans traveling to the World Cup as well as many special solutions such as “prize indemnity” to cover promotions risks for companies.
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