It could have been worse.
That’s what insurance companies who are in line to lose hundreds of millions of dollars need to be telling themselves over and over again.
As much as a mid nine-figure loss stings, insurers could have been looking at losses in the multiple billions of dollars on the Tokyo Olympics if they had not gone on.
But here’s the tricky part; it’s going to have a huge impact on the upcoming Olympic Games in Paris and probably even Los Angeles.
Because we’re still in a pandemic with no real definitive end in sight, insurers are not going to be lining up to provide a safety net for the 2024 and 2028 Olympic Games.
Here’s what Frank Zuccarello, a partner at Exceptional Risk Advisors told Sportico.
“It’s either gone, or it’s going to be a very, very high premium with conditions. You might be able to find a couple of underwriters who will charge some crazy rate, by which I mean 5% to as much as 20% of the amount insured.”
The $400 million price tag would probably have been closer to $2.5 billion if the Games had been cancelled, which IOC and Japan authorities were certainly discussing.
They insurance will cover lost revenues, including ticket sales, but the price would have been in the billions if NBC had not been able to broadcast the games.
Here’s one more quote from Politico from Brian Schneider, the senior director at Fitch Ratings.
“Certainly there are revenue issues with ticket sales, but they’re not as big a potential issue as for the broadcast rights,”
The one bright spot for insurers on the hook for the big losses is it won’t affect their financial bottom line too much, as they expected losses and had money set aside for it.