Do we have World Cup covered?

Posted On Friday, 05 June 2009 02:00 Published by eProp Commercial Property News
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SA’s Fifa host cities have to decide whether to take out extra insurance to boost their cover for some of the risks associated with the 2010 soccer World Cup.

20102010 host cities face hard insurance choice

US2bn in cancellation cover taken out

“If a fan falls off a bus — when is it the city’s liability and when is it Fifa’s?”

CITY OF CAPE TOWN

It’s a difficult choice. SA’s Fifa host cities have to decide whether to take out extra insurance to the tune of hundreds of millions of rand to boost their cover for some of the risks associated with the 2010 soccer World Cup.

Cities are grappling with the choice of making do with the cover of their existing insurance and that provided by the Fifa Local Organising Committee (LOC), or taking extra cover.

The City of Cape Town is not taking any chances. It is arranging for extra insurance cover of between R300m and R500m, says the city’s head of risk & underwriting, Chris Greenway.

The LOC and Fifa already have substantial coverage for the event. Football’s world body has taken out US640m cover against the possible abandonment of the 2010 and 2014 finals in SA and Brazil, respectively.

This might not be enough for the host cities, however. “There’s a long spreadsheet of risk,” says Greenway.

Cape Town’s concern is that there might be grey areas that are not covered by Fifa’s cover. “If a fan falls off a bus, for example, when is it the city’s liability and when is it a Fifa liability?” asks Greenway.

The worries over adequate coverage are being taken seriously by other host cities around the country.

“A lot of municipalities want to ringfence their 2010 World Cup insurance coverage,” says David Dyer, Alexander Forbes’s regional business development manager for the Western Cape.

The insurance adviser has already consulted with Cape Town and Stellenbosch about doing just this.

Greenway says this concern is what prompted Cape Town to get extra cover for the event. “Our existing fund is not big enough to cover it,” he says.

Cape Town might be taking extra precautions but Johannesburg, with two World Cup stadiums, feels the cover it has in place through the LOC is sufficient. Jo’burg will be taking out extra insurance for the volunteers and is considering whether to take insurance on loss of revenue from the cancellation of the event due to unforeseen circumstances, says Ronnie Stevenson, head of finance at the City of Johannesburg’s 2010 unit.

Cancellation insurance is a real poser for host cities. They would have to fork out a hefty nonreturnable premium in exchange for coverage in case the event could not be held in SA.

Greenway and Stevenson won’t put a figure to how much cancellation insurance coverage will cost their cities, saying only that it will not be cheap. “We spoke to our counterparts at host cities in Germany and they told us it is very, very expensive,” Stevenson says.

While the host cities might be weighing up whether to pay for more insurance cover, businesses and other entities have shown no hesitation and by the end of last year had already taken out $2bn in cancellation insurance, says Dyer.

 

Last modified on Thursday, 31 October 2013 17:14

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