The insurance industry would face a bill of between $2bn and $3bn if this year’s Tokyo Olympics are cancelled, according to analysis from Bloomberg Intelligence.
While noting that the International Olympic Committee (IOC) is committed to going ahead with the postponed 2020 Olympics, Bloomberg Intelligence notes that the committee has about $800m of event-cancellation cover in place. Additional cover has also been brought by the local Japanese organising committee.
When insurance taken out by broadcaster, sponsors, professional sports teams and hospitality is factored in, Bloomberg Intelligence reaches the $3bn top-end estimate.
As a result, it says insurers and reinsurers will be on “tenterhooks” during the next six weeks as the planned Tokyo Olympics nears and they wait to see if Covid-19 has another sting in its tail.
Swiss Re said last year that its direct Olympic exposure was $250m. Munich Re hasn’t specified its exposure but Bloomberg Intelligence said it is likely to run into the hundreds of millions of euros, some of which may already have been reserved.
Charles Graham, senior industry analyst at Bloomberg Intelligence, said: “Insurers and reinsurers will be on tenterhooks over the next six weeks as the Tokyo Olympics’ opening nears, with any cancellation of the already postponed 2020 event potentially costing the sector $2bn-$3bn in aggregate, based on our calculations. That would hit an event-cancellation industry already battered by record 2020 claims.”
The 2020 Olympic games were due to take place last summer but were postponed till 23 July 2021 because of the pandemic.
Opposition in Japan to holding the Olympic Games may be easing, according to the latest polls, after the number of Covid-19 cases dropped.
However, Bloomberg Intelligence notes that medical opinion remains strongly opposed to the games taking place, with reports that Japanese corporate sponsors also favour a postponement after international spectators were excluded.
The IOC is focused on making the Olympics as safe as possible, with plans for daily testing and the vaccination of athletes. A decision on allowing spectators into venues will be taken later this month.