Japanese media have speculated that the postponement of the Tokyo Olympic Games will cause direct economic losses of about $ 6 billion. In addition to the financial costs to Japan itself, sponsors and suppliers associated with the Tokyo Olympics will also face unprecedented adjustments. Also following this news are insurance companies such as Munich Re, which provides insurance services for the Olympic Games.
This article comes from WeChat public account: Economic Observer (ID: eeo-com-cn) , author: Jiang Xin, Ajou sweat, heart Zheng Yu, formerly titled “Tokyo Olympic Games underwriting side” dodged a bullet “? How big is the Olympic risk? What to do with the sponsors who took out real gold and silver “, picture from: IC photo
Postponed!
With the agreement between Japanese Prime Minister Shinzo Abe and the International Olympic Committee President Bach on March 24, the Tokyo Olympics will be postponed to 2021, and the debate about whether the Tokyo Olympics will be cancelled or not will finally come to fruition.
“We have been preparing for 6 years. In a way this means to start over from scratch. Of course, the second preparation will more or less improve the efficiency, but we have already signed a lot of contracts and re- Signing a contract is no easy task. ”Totoro, CEO of the Tokyo Olympic Organizing Committee, talked about the impact of this change at a press conference on the 24th.
The postponement may be a better result for Japan, which has been preparing for six years, compared to the cancellation. Also concerned about this news are insurance companies such as Munich Re, which provides insurance services for the Olympic Games.
Economic Observation Network reporter has learned that according to the requirements of the Olympic Organizing Committee, the Olympic Games need to introduce insurance mechanisms to spread risks. The Munich Re insurer, which has repeatedly underwritten the Olympic Games, also covers the Tokyo Olympic Games. According to people close to Munich 0 Reinsurance, Munich Reinsurance provides “hundreds of millions of euros” risk for the Tokyo OlympicsProtection. It is also reported that if rescinded, Munich Re could face USD 500 million in compensation.
Practices in the insurance industry have stated that the Tokyo Olympic Games is currently delayed rather than cancelled. How the compensation will be paid depends on the details of the insurance policy.
It is the event cancellation insurance that has drawn market attention. For property and casualty companies, this is a fairly traditional insurance business, with more developed European and American markets. What kind of insurance is this and what risks does the Olympic Games face?
In addition, Japanese media have speculated that The postponement of the Tokyo Olympic Games will cause direct economic losses of about $ 6 billion. In addition to the financial costs to Japan itself, sponsors and suppliers associated with the Tokyo Olympics will also face unprecedented adjustments.
What is the cancellation risk of the event
It is understood that the event cancellation insurance underwrites the organizer’s loss if the scheduled event cannot be held as scheduled or is completely cancelled due to the occurrence of an unexpected event specified in the insurance contract terms. Agreed to make compensation. The cancellation of the event is divided into seven situations: complete cancellation, abandonment, partial cancellation, postponement, interruption, relocation and reduction.
This type of insurance is industry-specific protection. Generally speaking, the two parties need to negotiate and customize when underwriting. It can cover most common emergencies or accidents: bad weather, accidents, terrorist attacks, nuclear, biological or chemical. Attacks, outbreaks of infectious diseases, urban riots, failures in urban transportation systems, outages, and industry strikes, etc., these provisions are excluded from general insurance clauses.
An insurance practitioner said that the event cancellation insurance is usually underwritten by “all risks”, that is, the risk of an event other than the specified exclusions leading to the cancellation of the event. The exclusions usually listed in the insurance cancellation policy include: changes in the schedule, lack of funds, inadequate preparation of venues, known infectious diseases, intentional acts, nuclear risks, biochemical pollution, war / terrorism, etc. Guaranteed under conditions.
Economic Observation Network reporters learned that Lloyd’s was the first company involved in the cancellation of insurance in the event, but since 1990, other insurance companies have also entered the market.
After 2000, tournament cancellation insurance began to appear in China, but due to the limited funding of most organizers, weak insurance awareness, lack of experience and data of insurance companies, etc.The cancellation of insurance has been slow in China. On June 23, 2001, the “World’s Three Major Tenor Forbidden City Plaza Concert” was held in the Forbidden City of Beijing. PICC P & C had borrowed from the insurance clauses of Lloyd’s to provide risk protection for the first time and introduced tournament cancellation insurance in China.
The 2003 “Rolling Stone” concert was cancelled due to SARS, becoming China’s first similar claim for insurance.
It is understood that the “Rolling Stone” concert was originally scheduled to be held in Beijing on April 4, 2003. On March 19, at the request of foreign performers, the organizer Beijing Times New Century signed an insurance contract with the PICC and Ping An Insurance companies with a maximum compensation limit of 4.15 million yuan, including insurance cancellation insurance And public liability insurance, at the end of March, the concert was cancelled due to the epidemic situation, and the two companies eventually paid 2.5 million yuan for compensation.
It is worth noting that, also in 2003, China hosted the 4th Women’s Football World Cup and invested nearly 90 million yuan for it. However, under the influence of SARS, some people estimated that indirect losses could reach 280 million yuan. However, because there was no introduction of tournament cancellation insurance, only direct loss compensation of US $ 920,000 was obtained.
In recent years, China ’s event cancellation insurance has begun to appear in sports events, but many insurance companies have taken the form of sponsorship to achieve this, and premium income is not well calculated.
Knowledge of Olympic risks
The hosting of the Olympic Games has been regarded by Japan as an important pillar for stimulating the economy. The fate of the Tokyo Olympic Games can be described as the development of the new crown epidemic, “three twists and turns”, and the attitudes of various core parties in the Tokyo Olympic Games have changed several times.
Goldman Sachs previously analyzed that if it was cancelled directly, Japan would face a total loss of 60 billion U.S. dollars, including tourism, consumption and exports. And Japan ’s No. 1 Life Economics Institute estimates that Olympic demand from tourists at home and abroad will disappear, and the GDP of 2020 (GDP) will Loss of 1.7 trillion yen, including the ripple effect, lost 3.2 trillion yen. According to the final budget announced by the Tokyo Olympic Organizing Committee at the end of 2019, the expenditure directly related to the operation of the Olympic Games is 1.35 trillion yen (approximately $ 12.6 billion) < / span>.
In addition to the new crown epidemic of pressing the pause button for the Tokyo Olympics, what other risks does the Olympics face?
From the perspective of insurance companies, during the preparation and hosting of the Olympic Games, the Olympic organizers, organizers, various organizations and individuals involved in the Olympic activities, and individual subjects and the general public may face natural or human-induced emergencies that may cause them. The risk of loss can be regarded as the Olympic risk.
From the history of the Olympic Games for more than 100 years, in addition to natural factors, due to political and economic reasons, the risks facing the Olympic Games are becoming more and more complicated. According to relevant statistics, there have been 3 Olympic Games cancelled due to war in history, one was relocated, 4 Olympic Games were met with massive resistance, two Olympic Games were directly attacked by terrorists, and many Olympic Games were affected. Overwhelmed by resistance and terrorist attacks.
For example, in the 3rd Olympic Games of 1904, in order to celebrate the centennial celebration of St. Louis in the United States, the Olympic Games originally scheduled to be relocated in Chicago to St. Louis will be held at the same time as the World Expo; the 1996 Atlanta Olympic Games, shuttle drivers from outside Knowing the road prevented the shuttle bus carrying the athletes from arriving on time; the Seoul Olympic Games encountered riots in 1988; the Montreal Olympic Games in 1976 went on strike; the 1972 Munich Olympic Games and the 1996 Atlanta Olympic Games suffered terrorist attacks.
In addition, accidental injuries of athletes, referees, workers and service personnel occur from time to time during the event. But for large event organizers, the biggest risk that they may face is the financial risk caused by the cancellation of the event, because TV broadcast revenue has become the main source of income for modern large-scale sports games. Taking the Olympic Games as an example, the usual revenue sources of the Olympic Games Organizing Committee include: TV broadcast rights income, ticket income, sponsorship income and other income. Among them, TV broadcasting income is the main source of income for the Olympic Games.
The introduction of insurance mechanisms to diversify risks has become the choice of the Organizing Committee. The organizing committees of the host countries of previous Olympics have alleviated unpredictable financial risks by purchasing event cancellation insurance from commercial insurance companies.
According to the data, after 1988, except for the Sydney and Athens Olympics, all summer and winter Olympics purchased event cancellation insurance. According to data from the China Insurance Regulatory Commission, Beijing ’s preparation and hosting of the 2008 Olympic Games stimulated nearly 300 billion yuan in insurance demand, and the resulting insurance premiums would reach 300 million yuan.
China People’s Insurance stated that it had customized insurance services including comprehensive liability insurance, auto insurance, property insurance, and personal accident insurance for the Beijing Olympic Organizing Committee. It is understood that