Tokyo Olympics delay insurance faces huge compensation, insurance cancellation rate for Chinese games remains low
Zhongxin Jingwei Client March 26 (Wei Wei intern Shao Meng) 2020 was originally a big year for sports events, but the global epidemic of the new crown pneumonia disrupted sports event plans.
On the evening of March 24, Beijing time, the International Olympic Committee and the Tokyo Olympic Organizing Committee issued a joint statement. Due to the new crown pneumonia epidemic, the Tokyo Olympics will be postponed to 2021. In fact, it was not only the Tokyo Olympics that were affected by the epidemic, but the United States ’largest basketball league, the NBA ’s five largest football leagues, and the Formula One World Championship F1, and many other major domestic and international events have announced suspension or extensions.
If the event is cancelled, the insurance industry will be the first. According to foreign media reports, Munich Re and Swiss Re provide event cancellation insurance for multiple events. But if the event is cancelled or postponed, how will the insurance company pay?
Munich Re or Swiss Re could face hundreds of millions of claims
According to Reuters, insurance companies could face huge claims if the Tokyo Olympics are cancelled. Munich Re provides insurance cancellation services for the Tokyo Olympics. It is reported that the insured amount is hundreds of millions of euros. It is also reported that the insurance coverage of this insurance plan is as high as 500 million US dollars.
The British insurance industry information website Insurance Times reports that if the Tokyo Olympics is cancelled due to the coronavirus epidemic, Swiss Re will face a loss of $ 250 million.
According to the report, Swiss Re said that the company has a 15% global market share in event cancellation insurance, and the organizer may file a claim due to the cancellation of sports events or concerts due to the corona virus. "We assess all of these potential impacts, and for now we are completely in control," said John Darcy, chief financial officer of Swiss Re.
Munich Re published an article on its official website on March 20th. Although it did not disclose the amount of potential losses in the Tokyo Olympics, it mentioned that even if the global epidemic catastrophe model equivalent to once in 200 years was assumed, The scale of insurance claims caused by the new crown pneumonia epidemic may be similar to the moderate natural disasters in the property and accident reinsurance business.
Insurance and risk go hand in hand. It is the responsibility of insurance to guard against risks, find them, and manage them well. The two insurance giants also have extensive experience in underwriting various disasters.
The Swiss Re Group's 2019 annual report shows that the profits of property and accidental reinsurance were affected by claims caused by large-scale natural disasters, of which large-scale natural and man-made disasters caused US $ 2.3 billion in losses. The losses caused by large-scale natural disasters in 2019 were mainly caused by wildfires, floods, and hail from Japanese typhoons Haibeth and Fassi, Atlantic hurricane Dorian, and Australia. Typhoon Feiyan's late claims progress further affected performance. In addition, man-made disasters, including the Ethiopian Airlines crash and the subsequent grounding of the Boeing 737 MAX fleet, also caused losses.
Munich Re's 2019 annual report shows that in terms of compensation, significant losses of more than 10 million euros in 2019 totaled 3.124 billion euros, of which Super Typhoon Haibeis alone caused 780 million euros in losses.
"For these two companies, the impact of the loss of the compensation on the financial impact is limited, but it will bring some pressure on the company's compensation rate and operating conditions." An executive of a reinsurance company told a reporter from Zhongxin Jingwei .
Will it be paid if the event is cancelled?
The organizer has invested a lot of capital and labor costs in the early stage, such as venue deposits, deposits paid to suppliers, etc. If the event is cancelled or postponed, the losses will undoubtedly be huge. At this point, the event cancellation risk has its place.
China Sports Insurance Brokers Co., Ltd. has served as an insurance consultant for the Beijing Olympic Organizing Committee, and has also provided sports insurance scheme design and other services for various international and domestic sports events. The company's marketing director Zhao Yu introduced to Sino-Singapore Jingwei reporters that the event cancellation insurance is a type of event cancellation insurance. The general event insurance plan mainly includes liability insurance, accident insurance, property insurance and car insurance. The event cancellation insurance is international It is also common in large events.
A major focus of the insurance industry is whether new crown pneumonia, as a new type of infectious disease, is under coverage?
Zhao Yu said that in general, the basic clauses of event cancellation insurance cover various losses caused by natural disasters, accidents, etc. Infectious diseases are usually excluded from the basic clauses, but there are additional clauses in insurance contracts, Special clauses can also be paid if the insured has clearly stated the liability for infectious diseases in the additional clauses.
"The event cancellation insurance is a customized product. There are no standard terms. Both parties need to negotiate and customize, but I read the terms of several insurance companies. Generally, they do not include the protection of infectious diseases. If you want to buy insurance, you can use it as an additional clause. Expand in. "The executives of the reinsurance company believe that according to the arrangements of previous large-scale international events and the information currently reported by the media, the cancellation of insurance for events purchased by the International Olympic Committee for the Tokyo Olympics may cover the risk of infectious diseases.
In addition, it is worth noting that, from the current point of view, the Tokyo Olympics is only postponed for one year, not cancelled. Will the cancellation of the event trigger the insurance liability? Zhao Yu introduced that, in general, the event cancellation insurance mainly pays for the costs that have been invested and cannot be recovered, as well as the cost of additional investment. It not only includes the cancellation of the event, the extension of the event will also be included in the policy, and the extension of the event will require additional investment , So it is possible to get a part of the compensation, but the amount of compensation will be less than the amount of compensation for all cancellations.
Insurance cancellation rate for Chinese events is low
"The organizers of many events or events will actively ask for event cancellation insurance, but it will be gone after listening to the premium." A related staff member of an insurance brokerage company introduced.
"The investment and cost of the event is relatively high, and the income is limited, and the rate of the event cancellation insurance is high. Even if the event is risky, but the organizer cannot bear the cost, it will not be insured." According to Zhao Yu, At present, there are not many event cancellation insurances insured by domestic event organizers. Some overseas sports associations, such as football, basketball, and snow sports, will require event cancellation insurance. However, domestic sponsors may consider higher insurance rates and insurance coverage. And claims are tedious, so rarely buy.
Zhao Yu believes that the new crown pneumonia epidemic will also make more event organizers aware of the event cancellation insurance, but whether more people in this insurance category will be insured not only depends on risk factors, but also on cost considerations.
The executives of the above reinsurance companies stated that the epidemic also brought a wake up to the insurance industry. Some catastrophe model companies and insurance companies often pay more attention to the risks of natural disasters, such as floods, earthquakes, typhoons, etc., and rarely pay attention to infectious diseases. Such artificial risks may be too optimistic for the entire industry, so premiums may not be sufficient.
"As far as we know, after the crisis, the relevant insurance policies of major insurance companies have not changed significantly so far. As the epidemic situation is still ongoing, the impact on the world economy and insurers has not been known in the end, insurance People will strengthen risk management, and it is expected that the prices of related insurance products may be adjusted. "Liu Jing, head of the Asian sports and entertainment industry / underwriting manager of the special industry risk department of Anda Insurance, stated in an interview with the media.
Zhao Yu recommends that policyholders purchase the cancellation insurance for the event before planning the event months. If it involves some large international events, it is best to apply for insurance one or two years before the event. (Zhongxin Jingwei APP)
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