Threat to Games forces IOC to seek £100m insurance
By Laura Peek
Like watching paint dry: a bystander waits patiently for heavy lifting equipment to roll a section of roofing into place over the main Olympic stadium yesterday. It is the painfully slow process of construction work in Athens that has in part caused the IOC to seek an insurance policy against cancellation of the Games
THE International Olympic Committee (IOC) is seeking insurance to cover the Olympic Games in Athens in case they are called off, The Times has learnt. Athens 2004 would be the first modern Olympiad to be insured against cancellation. The decision comes amid growing fears about increasing construction delays and concerns that Greek security may not be up to scratch.
The IOC last night confirmed that it is negotiating more than £100 million of insurance coverage to protect against the full or partial cancellation of the Games, but a spokeswoman insisted that the decision does not indicate a lack of faith in the Greeks. “It is a policy issue whereby the IOC is looking to manage its risk regarding its core business, the Olympic Games,” Giselle Davies, the IOC spokeswoman, said.
Davies added that it is being sought as part of plans announced in 2002 by Jacques Rogge, the President of the IOC, to shore up IOC finances against the loss of revenue should an Olympics be cancelled. However, insurance experts last night said they doubted whether the IOC would find insurers at such a late stage for such a high-risk event.
The Times revealed last week that construction delays mean that there will be less time to erect security fences, install CCTV and train security guards before the Games open on August 13. Scotland Yard is so worried about security that it is considering controversial plans to arm British police officers in Athens.
“Insurers know that, given the timescale, the likelihood is that stadiums may not be completed and therefore there is a very good chance there could be a claim,” one insurance broker said. “They will also be thinking that terrorists could have penetrated these unfinished stadiums. All that will load up the premiums.
“They should have taken out the insurance between two and five years ago, when it was more up in the air whether everything would be finished or not.”
Heightened fears about a terrorist attack after the bombings in Madrid make the Athens Games an even less attractive prospect for would-be insurers. Francis Fernandes, partner at the London actuaries, Lane Clark & Peacock, said: “With increasing concerns over a possible terror attack, there will be more reluctance for insurers to cover this kind of risk. There is so little time left, the level of premium that insurers will charge has to reflect the risk and the risk is higher.” An IOC source said that there is no “understudy” city standing by to host the Games in case Athens is not able to do so.
A letter sent last month to the heads of the 28 sports on the Athens programme indicates that the IOC is seeking insurance to the value of a little more than £100 million. The policy would apply to any events outside the control of the organising committee or the IOC that would lead to full or partial cancellation of the Games.
The IOC would like the Athens Olympics to be covered against earthquakes and terrorism. The coverage is intended to be a “safety net”, the IOC said.
At an IOC meeting in Mexico in 2002, Rogge acknowledged that he was looking at the issue of cancellation insurance. He said then: “The international political situation and the danger of terrorism means the insurance market is reticent against taking these kind of risks. But we will continue our efforts in this area.”
A final decision on whether to purchase the coverage could come at the May meeting of the executive board.
Since 1992, the IOC has maintained a reserve fund to cover such a calamity as cancellation. In 2002, the Swiss-based fund totalled £78 million, with the IOC calculating that it would need £106 million to continue operating for four years if an Olympics was called off.
The IOC was not insured against cancellation of the 2002 Winter Olympic Games in Salt Lake City, which took place soon after the September 11 terror attacks. Before then, insurance companies were offering £110 million of Olympics coverage for about £3 million.
Stratos Safioleas, spokesman for Athens 2004, which is organising the Games, said: “It is not for us to comment on an IOC policy that concerns not just Athens but the Olympic Games in general. We are working hard to make sure that on August 13 we will be ready to hold a very successful event.”
Greek authorities were last night keen to emphasise that Rogge has expressed the wish to insure all future Games against cancellation. The Athens Organising Committee for the Olympic Games (Athoc) is still finalising its own £10 million insurance package that covers 15,000 athletes, 20,000 officials, 1.5 million spectators and four million Athenians involved in the event.
The most important contracts cover damages that organisers might cause to third parties. Coverage of organisers’ assets such as installations and rented facilities also constitute a considerable chunk of insurance. But the Games’ mostly new venues, construction of which were entirely financed by Greek taxpayers, are not covered by the package, according to an Athoc spokesman.
IOC seeks Olympic insurance
The International Olympic Committee is trying to organise an insurance deal to cover the risk of the Athens Olympics being called off.
Concerns over construction and security have led many to believe the Games will not take place late this summer.
But IOC spokeswoman Giselle Davies said the current effort did not reflect any lack of confidence in the Athens Games.
"The IOC has been working for some time to have a policy to manage any risk regarding our core business," she said.
The deal, which would reportedly be worth more than £110m, could allow for terrorism, earthquakes or other factors and cover full or partial cancellation of the Games in August.
It would also be likely to cover future Olympics.
Greek officials, however, downplayed the move.
"The president of the IOC has announced some time ago his intention to provide insurance coverage for future Olympic Games," Greek government spokesman Theodoros Roussopoulos said.
"This does not concern Athens (specifically) but is a general IOC policy."
The Athens Games will be the first summer Olympics since the terrorist attacks of 11 September 2001.
There was no insurance coverage for the 2002 winter Games in Salt Lake City, which took place five months after the attacks.
