IOC aims to receive insurance compensation for postponement

Following the postponement of the Tokyo Olympics due to the coronavirus pandemic, the International Olympic Committee (IOC) is now said to be in talks with insurers over being compensated.

According to a report from the Associated Press citing a statement from IOC Olympic Games operations director Pierre Ducrey, an 'open discussion’ is under way with insurance brokers whereby the aim is “to try and find the right level of compensation to help us bear the cost of having to wait another year”.

While the IOC pays for insurance against the cancellation of an Olympics event, it has been unclear if its policy covers the one-year postponement brought about by the pandemic.

Cancellation policies detailed in the IOC’s annual accounts cost $14.4m for the 2016 Rio de Janeiro Olympics and $12.8m for the 2018 Pyeongchang Winter Games. Last month, the IOC said it had set aside $650m to cover its own potential extra costs for the postponement. However, costs for local organisers in Japan are expected to reach billions of dollars with most of the bill paid for by taxpayers.

In an earlier interview with Asia Insurance Review, Fitch Ratings director of APAC insurance Teruki Morinaga said that an absolute majority of any major losses caused by the cancellation or postponement of the games would be borne by Japanese corporations even if they had purchased event cancellation and business interruption insurance related to the Tokyo Olympics. This is because any new virus tends to be excluded from the contracts in most cases.

“If such a ‘new’ virus is included in the contract, premium rate tends to be very expensive and most Japanese corporations do not want to pay such extraordinary expensive premiums partly because risk finance at Japanese corporations is relatively less sophisticated than that at typical US major corporations and also Japanese non-life insurers are rather prudent in their underwriting of any business interruption risks,” he said.

Source: Asia Insurance Review