Not all fun and games. These are the insurance risks of Hong Kong Sevens
As the countdown begins for Hong Kong’s Rugby Sevens that starts this Friday, insurance companies are gearing up for the risks that mega events like these entail.
The two main risks that may trigger compensation from insurers, according to global reinsurer Munich Re, are event cancellation and health.
“Big sporting events like the Olympics, soccer or rugby world cups are big businesses, with revenues generated through television screening rights, sponsorship, ticket sales, corporate hospitality, travel packages and souvenirs running into billions of dollars,” said Andrew Duxbury, underwriting manager contingency of Munich Re, who is an expert on event cancellation insurance.
Like any big sporting event, he said, there would be huge losses in the event of any disruption to the schedule, Duxbury told the South China Morning Post. In 2011, the Rugby World Cup in New Zealand was affected by the Christchurch earthquake,which forced several games to be relocated in other cities. It was the insurers who had to pay for the additional costs.
Financial losses when a sporting event is cancelled or changed as a result of natural diasters, weather or riots, are covered by insurers. But insurers are exempted from payment for event cancellations owing to lack of attendance, incomplete work at the venue or failure by the organisers to get the licence.
“The sums insured under event cancellation insurance vary greatly, ranging from several thousand euros to hundreds of millions of euros per policy, depending on the type of event and the insured party,” he said.
Major worries about underwriting big sporting events could include TV sponsorship, ticket sales, political risks, natural catastrophes and the host country’s experience in holding global events.
“The biggest challenge posed by sports events of this scale is that they cannot usually be moved to another venue at short notice,” he said.
Another insurance risk related to Rugby Sevens is the health impact from excessive alcohol consumption leading to medical or critical-illness insurance compensation, according to a Munich Re report issued last week.
Quoting a CNN report from 2014, Munich Re said 320,000 pints of beer plus 60,000 glasses of Pimm’s and 10,000 glasses of wine were consumed during Rugby Sevens. The beer consumption during the event accounts for about 3 per cent of the city’s total annual intake.
“A number of studies have documented a link between an increased risk of coronary heart disease and a causal link to strokes and sudden cardiac death. Excessive drinking also increases the risk of cancers of the liver, bowel, breast, mouth, throat, larynx and oesophagus. The risk of breast cancer in women is 1.5 times that of women who do not consume excessive amounts of alcohol,” the Munich Re report said.