Insuring the biggest shows on earth

Major sporting events such as Euro 2024 and the Olympics excite and unite billions of people around the world, but for event organisers, delivering such spectacles is not without its challenges, whether this is the potential for disruption caused by extreme weather or a cyber incident. Years of experiences, learnings, and risk management planning ensures the shows go on, as does the support of insurance, which has an integral role to play in helping enable such amazing events to take place.

Europe takes centre stage this summer, hosting two of the world’s largest sporting events in short succession. The month-long UEFA Euro Championship football tournament kicked off on June 14 in Germany and will soon be followed by the Olympic Games, hosted by Paris from July 26 until August 11, and concluding with the Paralympic Games from August 28 to September 8.

The organisation of any sporting competition brings challenges but none more so than eagerly anticipated mega events like the Olympics, Euro 2024 or the football World Cup. Hosting such events is a mammoth undertaking, requiring a huge investment in the infrastructure and logistics. Some 15 million visitors are expected to be in Paris for the Olympic Games, which will see 10,500 athletes from over 200 nations compete for gold. Billions more will watch both the Olympics and the Euros online and on TV.

The Olympic Games Paris 2024 are said to be the biggest sporting event ever organised in France. With ticket sales, TV rights and sponsorship deals running into the many millions, the values at stake are huge. Almost all of the €4.4bn cost of running it is privately funded through ticket sales, hospitality, sponsorship and TV rights, according to the IOC. A similar amount has been spent on upgrading venues and infrastructure in Paris- 95% of competition venues are already built or temporary. Many venues will be for the long-term benefits of local communities after the Games, in the form of housing and community sports centres, for example.

That said, the Olympic and Paralympic Games Paris 2024 are expected to be among the highest value yet in terms of sums insured, reflecting the sheer size, commercial value, and the fact Paris is hosting, explains Jan Prechtl, a regional head of entertainment insurance at Allianz Commercial.

“Values associated with large sports events were already increasing before the Covid-19 pandemic,” says Prechtl. “The audiences have become more global, we have seen the sums insured increase over recent decades. And since the pandemic, costs have risen even further with inflation, which can be seen in ticket prices, hotels, and travel costs etc. This all helps drive-up insured values for large sporting events further.”

“It’s not just the Olympics. Without the support of insurance, the organisation of many major international events would not be possible, at least not at the scale we see today,” says Mark Whayling, global product lead, entertainment, Allianz Commercial.

The show must go on

Almost all stakeholders involved in events such as the Olympics are covered by insurance, from the sport’s organising body, the International Olympic Committee (IOC), and the national organising committees, down to national teams or individual athletes, as well as sponsors, broadcasters, hospitality firms, retailers, and suppliers.  

“Insurance now plays a critical role in major sporting events. From the traditional insurance covers, such as property and motor, through to various liability coverages like public liability, accident, and health, to directors and officers, and cyber insurance. To varying degrees, all these coverages are likely to be in place, providing valuable protection for these events, their organisers, participants, and spectators,” says Whayling. 

Perhaps the largest and most challenging risk for the insurance market is event cancelation, which covers the financial impact of cancelling or postponing an event due to factors such as adverse weather, security and terror threats or public health concerns. Values covered by cancellation insurance for a major international sporting event can easily run into the hundreds of millions of Euros, Prechtl adds.

In addition to the ‘big ticket’ coverages like event cancellation, insurance also plays a key role behind the scenes, supporting the day-to-day operation of major sporting events or protecting the sporting venues themselves. Allianz France, for example, is one of the main insurers of the main infrastructures such as the Vélodrome de Saint-Quentin-en-Yvelines, the nautical stadium at Vaires-sur-Marne and the media village. It also provides coverage for the Marathon pour tous. 

For fans who plan to watch the Games in Paris, travel and ticket cancellation insurance is available.  Athletes, teams, and players often require medical insurance coverage to protect against injuries or illnesses occurring during training or competition, and depending on their contractual agreements, they may also need liability coverage to protect against claims arising from their participation in events. Organisers will also require large limits of liability insurance to cover risks associated with employees and volunteers involved in the events, as well as spectators.

Team effort

As the current official Worldwide Insurance Partner for the Olympic and Paralympic Games, Allianz collaborates with the IOC to provide insurance solutions and services to the organising committees for the Olympic Games, the National Olympic Committees and their Olympic teams and athletes. The current partnership, building on a collaboration with the Paralympic Movement since 2006, was announced in 2018 and runs through to 2028.

As a leading insurer of large complex events, Allianz is involved in the Games at a “broad scale,” says Deanim Jadean, global technical manager, Olympic and Paralympic partnership, who is coordinating the multiple underwriting programmes across various Allianz Property & Casualty units from Allianz France to Allianz Commercial and Allianz Partners. However, an event as large as the Olympics requires the participation of many insurers.

“Every policy for the Games is a collaborative and market effort. Insurance is about the law of big numbers and large events like the Olympics are carried on many shoulders. We work closely with the IOC and the Paris 2024 Organising Committee to thoroughly understand the risks and develop highly tailored wordings which are then placed in international insurance markets. There are many insurers and reinsurers involved to provide the required levels of coverage for such Games, which are so vast and with truly huge sums insured,” explains Jadean.

Underwriting the Olympics Games is rather an art than an actuarial science. “We can’t take the experiences from previous Games and repeat a similar approach and assessment two years later (including the Winter Olympics),” explains Jadean who served many years as a commercial underwriter for Allianz in South Africa. “Each Games takes place in a different environment and country. For Paris 2024, it’s the urban character of the Opening Ceremony and the sports competitions which makes it unique. For LA28 we may need to factor in the special legal landscape in the United States when it comes to liability or tort.”

Lessons from the pandemic 

This year’s Olympics marks the first games to be held in front of spectators since the pandemic and without Covid-19 restrictions. Tokyo 2020 was postponed due to the pandemic, but was successfully held a year later, albeit largely behind closed doors. No Olympics have been cancelled since the Second World War.

While the World Health Organisation declared in May 2023 that Covid-19 was no longer a Public Health Emergency of International Concern (PHEIC), the possibility of future pandemic outbreaks remains. Organisers of sporting events are tasked with assessing the potential impact on an event, including the need for coverage for event cancellation, postponement, or disruptions due to public health emergencies.

Major sporting events like the Olympics and Euros are continually learning from previous tournaments, explains Prechtl. For example, previous Olympics have also led to the implementation of disease surveillance systems and relevant contingency plans, as well as improvements in security management.

“What we see as insurers, and what the organisers do well, is benefit from previous experiences to identify best practices. For example, the Olympic Games Paris 2024 has learned from the experience of Tokyo 2020, which were postponed and rescheduled because of the pandemic. You build your safety net and install your insurance coverage with the hope you will not use them,” says Whayling. 

Security risks are the top concern

Given the current global geopolitical climate, security threats have overtaken Covid-19 as the biggest threat to major sporting events in 2024. Given the high-profile nature of these events, and the history of terrorist attacks in both France and Germany, there is a heightened risk of terrorism. France, which plans to deploy about 45,000 French police and security forces at the Olympics, says it has contingency plans to scale back or relocate the opening ceremony, should the security threat increase, but has also been working for years already under the assumption that the highest security measures would be required.

Insurers have been asked to provide specialised coverage for terrorism-related incidents, property damage, business interruption and liability, often complementary to governmental programs. In addition, insurers will have needed to consider the risks of civil unrest or climate activists disrupting the event, for example, and provide coverage for property damage, business interruption, and liability claims arising from civil disturbances.

“The larger and more global an event becomes, the more it is exposed to geopolitical risks and security threats,” says Prechtl. “Large international sporting events attract global attention and therefore can be targeted for politically motivated attacks, as well as civil unrest and protests by people looking to be heard. You can argue that this risk is heightened given the current geopolitical environment, but there has rarely been an unchallenging time to hold such high-profile sporting events. In parallel, security measures are being upgraded constantly.”

Cyber security challenges

As major international sporting events, the Euros and Olympic Games Paris 2024 are both potential targets for cyber-attacks. And the threat is not just hypothetical. At the Olympic Winter Games Pyeongchang 2018 a cyber-attack disrupted the opening ceremony, while Beijing 2008, London 2012, and Rio 2016, and Tokyo 2020 all experienced cyber-threat activity. It is anticipated that Paris 2024 will not be any different.

“Cyber has become a real and present threat for major events, whether from a malicious attack or a technical glitch. Given the current geopolitical and cyber-risk landscape, it is clearly a scenario seriously considered for high-profile sporting events,” says Rishi Baviskar, global head of cyber risk consulting, Allianz Commercial.

Today, major international sporting events rely on digital technology, from ticketing and merchandise to broadcasting and media, as well as for the planning, communication, and organisation of the events themselves, explains Baviskar. However, dependency on technology can create bottlenecks from a risk perspective, leading to an aggregation or concentration of risks. Artificial intelligence-based attacks have the potential to significantly disrupt sporting events, ranging from ticketing fraud to interference with live broadcast feeds and manipulation of digital scoreboards or displays. A delay of just a few minutes to a sports event could result in interruptions to the original advertising schedules of broadcasters. Insurance therefore becomes critical to cover transmission failures as well.

More events now buy standalone cyber insurance cover, according to Baviskar. Insurers are asked to provide coverage for cyber risks, including data breaches, network disruptions, and ransomware attacks that could impact event operations and infrastructure.

“Cyber-attacks cannot be avoided but effective security mechanisms can help to avoid losses, while insurance can provide an additional layer of protection,” says Baviskar. “Preparation and advanced business continuity and crisis management are key, as is training to spot threats such as phishing scams. Many organisers of sporting events will also conduct ‘war game’ exercises to identify likely cyber scenarios and potential vulnerabilities. For live broadcast feeds or digital service platforms, secure, resilient, and redundant infrastructure offers a guaranteed service availability.”

Climate change considerations

Historically, event organisers and insurers have been concerned with adverse weather events such as storms, lightning, and extreme rainfall. However, as the planet continues to warm, climate patterns change, resulting in the weather becoming more unpredictable, with extreme heat now a significant factor for consideration, according to Whayling.

“Among other issues, extreme heat raises the risk of bushfires. While an event may be located hundreds, if not thousands, of miles away from where the bushfires occur, they could still be affected by poor air quality, as we saw following the 2023 Canadian bushfires, which led to events being cancelled all over North America,” says Whayling. “Athletic races such as marathons or triathlons can be deemed unsafe to go ahead due to poor air quality and extreme heat conditions.”

In addition to health and safety concerns, prolonged heat can also make the ground too hard, drying out the soil and reducing its ability to absorb water. Subsequent rainfall can often result in the flooding of an event site as the water has nowhere to run other than on the surface.

“Ultimately, event organisers need to be prepared for all eventualities to ensure their events run smoothly and, more importantly, the safety and well-being of all involved,” says Whayling. “By being proactive and ready for extreme weather conditions, event organisers can take control of the situation and mitigate potential risks.”

BOXES

Risks and considerations when insuring large sporting events include:

• Cancelation or postponement: Events may be cancelled or postponed due to factors such as adverse weather conditions, security and terror threats or public health concerns.
• Liability: There’s a potential for liability claims from spectators, participants, or third parties for injuries, property damage, or other incidents occurring during the event.
• Property damage: Sporting events involve significant infrastructure and equipment, which may be susceptible to damage from accidents, vandalism, or natural disasters.

Top causes of insurance claims at large sporting events:

• Extreme weather events: e.g., cancellation.
• Injuries: Claims related to spectator or participant injuries, including slips and falls or collisions.
• Property damage: Claims for damage to venues, equipment, or facilities due to accidents, vandalism, or natural disasters.
• Third-party liability: Claims arising from third-party property damage or bodily injury caused by the actions of event organisers, participants, or spectators.

Insurance requirements for athletes, teams, and players:

Medical insurance: Athletes, teams, and players often require medical insurance coverage to protect against injuries or illnesses occurring during training or competition. 

Liability coverage: Depending on their contractual agreements, athletes and teams may need liability coverage to protect against claims arising from their participation in events.