Source: insurancejournal.com

Delaying the Olympics is likely to cost insurers much less than canceling the Tokyo Games altogether, with a chance that some of those involved may not have policies specifically covering a postponement, industry sources say.

The Tokyo Olympics were postponed on Tuesday to 2021, the first such delay in the modern Games’ 124-year history, as the coronavirus crisis forced the delay to one of the last international sporting events still standing this year.

Jefferies analysts have estimated the insured cost of the Games at $2 billion, including TV rights and sponsorship, plus $600 million for hospitality. The International Olympic Committee (IOC) takes out around $800 million of protection for each Summer Games, which covers most of the roughly $1 billion investment it makes in each host city. Japan has put up $12 billion to host the 2020 Olympics.

After the postponement, the IOC, local organizers, sponsors and hospitality and travel providers are among organizations who may look to recoup some money from insurers for the delay. But this process is likely to be complicated. Tokyo 2020 organizing committee chief executive Toshiro Muto said on Tuesday it was not clear who would pay the extra costs arising from the postponement. The cost of postponing the Games was not discussed by IOC chief Thomas Bach and Japanese prime minister Shinzo Abe on Tuesday, Bach said, adding: “this is about protecting lives.”

Leigh Ann Rossi, chief operating officer of Sports and Entertainment at insurance broker BWD, said that for those organizations whose policies do cover the costs of postponement, “a claim would be less…than for a full cancellation.” Rossi said it was difficult for insurers to determine an exact pay-out on such cover until after a postponed event finally takes place. While Simon Sloane, partner at law firm Fieldfisher, said postponement insurance could cover money already spent and additional costs incurred to rearrange the event.

Insurance losses are likely to be borne by Lloyd’s of London , a commercial insurance marketplace home to dozens of specialist insurers, industry sources say. Reinsurers such as Swiss Re and Munich Re share part of the burden of large losses with insurers in return for part of the premium. Swiss Re has a $250 million exposure, chief financial officer John Dacey told analysts last week. Munich Re has a $500 million exposure to the Tokyo Olympics, one source said.