Insuring the Olympics

Imagine overseeing an operation where 10,000 of the world's greatest employees, and a support staff of thousands, were under your protection. Imagine these employees came from 205 different countries. These employees need health care, their staff needs workers compensation coverage, and business interruption coverage is a must. Imagine finally that the whole operation was taking place in a foreign country with a predisposition against private financial markets.

Thinking about this gives just a little insight into the difficulties faced in putting together a risk management plan for the 2008 Beijing Olympics.

The International Olympic Committee (IOC) began formally insuring elements of the games in 2006 and the Beijing Organizing Committee for the Games of the XXIX Olympiad (BOCOG) purchased a liability policy for the site in December 2006 from PICC Property and Casualty (PICC P&C), China's largest public non-life insurance company. That policy covers covers public liability, product liability, professional liability and employer's liability until the close of the Paralympic Games. The cost of the policy was not disclosed and some insurance experts are concerned that none of the risk was reinsured and is, in effect, backed up by the Chinese government. PICC Property and Casualty is an official insurance partner of the Olympics.

It is estimated that the IOC has transferred nearly $1 billion to the local organizing committee for the games, but a comprehensive and unified insurance plan has not been forthcoming. Some countries, including the United States, have opted to create risk management plans of their own. Of the insurance that is in place, it consists, in large part, of interruption or cancellation coverage. Such coverage is designed to protect third-parties in the event the Beijing Olympics could not be completed. For example, a substantial policy was procured to cover NBC in case its coverage of the Games is disrupted or canceled.

The IOC, for example, purchased a cancellation policy with $415 million in limits at a premium rate of $9.38 million for the games. In all, experts estimate over $2 billion in insurance has been purchased to cover the Olympics.