A try-ing affair: insuring the Rugby World Cup
19 September 2007
As English hopes for the Rugby World Cup rest on Saturday's game, lloyds.com examines the event from the view of the insurers and event organisers.
It has become the third largest sporting event on the planet, only behind the Olympics and the FIFA World Cup.
The Rugby World Cup will span six weeks, 48 games, and will use 12 grounds across France, Wales and Scotland.
Over three billion people around the globe watched the 2003 event and the organisers expect that figure to be bettered for this competition.
For the players and the fans it is undoubtedly the highlight of the rugby calendar, for the organisers it is mammoth task which needs increasingly complex insurance coverage.
In insurance terms the event is split into categories - cover for the organisers and cover for the firms that have an ancillary financial stake in the event.
Lennox Batten, sports specialist at broker Marsh, said the days leading up to the opening ceremony are the time of greatest liability to the organisers.
“The biggest fear for the organisers is cancellation,” he said. “The last few days before the event is when liability is at its peak because the organisers will have spent the vast majority of the money they needed to stage the event, and until the first game, there’s no revenue being generated. The longer the event goes on the less the liability; because as the matches take place the exposure to claims for the organisers diminishes.”
The biggest issue during the competition, aside from the cancellation of the games themselves, is the safety of fans entering and exiting the stadium. A comprehensive risk management exercise will have been undertaken by the insurers and the organising committee to ensuring the fans have the safest of environments to watch the event.
The weather will have definitely been taken into account. As recently as 1995 when South Africa hosted the World Cup, one of the semi-finals was delayed for several hours while water was removed from the pitch following a torrential downpour, creating fears that players may drown at the bottom of rucks if the game was played.
The threat of terrorism will have also been factored in, Batten said.
With audiences expected to top the three billion mark the amount of income generated by the sale of television rights remains far and away the biggest single revenue earner for the organisers.
“The event is getting increasingly larger viewing figures and, as such, the amount of advertising involved has grown significantly,” Batten added.
The French broadcaster will have the responsibility for physically covering the games and that feed will then be sent to the national broadcasters around the world who will upload the images and transmit them to their domestic audiences.
For the organisers and the French broadcaster their liabilities finish when the images are transmitted to the international television stations. Therefore, the failure of a satellite that blacks out coverage in Australia or the UK, for example, will not come back to the International Rugby Board organising committee.
“For the television stations their exposure increases as the event goes on because the audiences will become bigger,” Batten said. “The rates for advertising slots for the semi-finals and the final will be multiples more than for the pool games. Failure to broadcast the latter stages of the event would be a huge financial blow.”
Catering firms and merchandising firms will all have taken out their own cancellation coverage. For the firms that provide the catering for both the corporate hospitality and the fans in the stadium, the postponement of a game for weather or other circumstances - even for 48 hours - can leave them with huge amounts of food which will not keep until the rearranged fixture is staged.
“Given the amounts of liability involved, much of the insurance will find its way to the major insurance markets, such as Lloyd’s,” Batten explained. “It does not need to be a direct issue with the venues of the competition itself to impact on the ability to stage it. As we saw in 2001, with the postponement of the Ryder Cup following September 11, there can be events outside of the country itself that can have an effect.
Last updated on 11 Oct 2007
