2012 in Numbers
London will be the first city in history to hold three Olympic Games.
Construction of the London Olympic Park required over 200 buildings to be demolished, 1.4 million square metres of site to be cleared, 200 kilometres of electrical cables (installed in two 6km tunnels dug under the Park) and 30 new bridges. In addition 4,000 trees, 74,000 plants, 60,000 bulbs and 350,000 wetland plants have been planted (and 2,000 newts relocated to a nature reserve).
There are no fewer than 50 sites (in England, Scotland & Wales) involved in the Games, which will host 14,700 athletes from 205 countries competing across 26 sports in 34 venues located in London and around the UK. Spectators to the Games will number around 500,000 visitors each day to the competition venues, 20,000 media and broadcasters, and a worldwide television audience of about five billion (with £5 billion being the estimated advertising revenue).
Equipment required for the Games includes about 600 basketballs, 541 life jackets, 2,700 footballs, 53 swimming lane ropes, 6,000 archery target faces, 165,000 towels, 510 hurdles, 356 pairs of boxing gloves and 99 training dolls for Wrestling and Judo.
The precautions being taken to safeguard the Games are even more impressive. In terms of personnel there are 12,000 police officers, 15,000 security staff, and 17,000 military personnel (including 11,800 soldiers). The equipment deployed is also incredible: the Royal Navy’s biggest ship, HMS Ocean, will be stationed in the Thames, while Typhoon jets, E-3D Sentry and VC-10 aircraft, Sea King, Puma and Lynx helicopters and Rapier and Starstreak missile sites are all ready to respond.
All of this adds up to the largest peacetime security operation the UK has ever seen and highlights the ongoing threat of terrorism and the need to appropriately insure the Games.
2012 in Insurance
Earlier this year, following approximately twelve months of intense negotiations between the IOC and 26 international insurance entities, the IOC announced that it had officially insured the London 2012 Olympic Games for a sum of £62,000,100. The insurance policy is intended to cover any terrorist attack or outbreaks of hostility which might impact the progression of the Games. The £62million sum represents the maximum amount insurers are prepared to take on as financial risk with the amount divided among the 26 sporting federations competing in the Games (which would pay about a fifth of their losses). In addition to this large figure shouldered by global insurance companies there are two other reserves in place: the IOC pool of about £310million; and Pool Re, a UK-backed reinsurer “of last resort” which retains £4.5 billion in assets.
The IOC Pool
The IOC, under the leadership of Jacques Rogge, oversees a pool of £310,000,500 (in comparison, the Athens Olympics was only £105 million) maintained in reserve to cover losses. Insurance coverage for the Games primarily falls into three main categories: liability, event cancellation, and property damage insurance (albeit with some overlap between categories).
Pool Re
In addition to the formal Olympic Insurance Policy, Pool Re, a UK-backed reinsurer “of last resort” retains a pool of £4.5 billion in assets specifically earmarked to cover the Olympic Games should the need arise. Pool Re was created in 1993 in cooperation with the UK government as a response to the withdrawal of reinsurance cover of the UK market for terrorist attacks, following the IRA bombing of the Baltic Exchange in 1992. Insurers in the UK can reinsure with Pool Re. their commercial property liabilities for terrorism claims in excess of their self-insured retention.
The terms of the official insurance contracts signed between the IOC and its international insurers – overseen by broker Marsh – remain strictly confidential and largely shielded from the public eye. Such confidentiality stems from a desire to retain sponsors and to block opportunistic third party claims. Thus, many questions, including whether or not the terms of the signed policy would truly limit all losses and whether or not some facets of the Games will remain outside of coverage, will remain largely unanswered, though widely speculated in the public domain. In turn, the IOC has moved progressively to retain control over insurance risks by requiring athletes, participants and vendors to sign Waivers of Subrogation before interacting with the Olympic Delivery Authority (ODA), which constructs the venues and provides the Games’ infrastructure. In addition to the employee liability insurance and the professional liability insurance maintained by consultants, suppliers and third parties, the Olympic Delivery Committee will also manage risk by offering coverage at all of its sites and facilities. The ODA has, in turn, placed much emphasis on the layout of venues, security provisioning and facility management to keep related law suits remains at a minimum and to serve as a first-line of defence against potential risks.
Conclusion
Staggering numbers are involved in the preparation and composition of the Games, which require significant insurance issues to be addressed. Taken together, London is (hopefully) ready for what the Culture, Media and Sports spokesman Baroness Garden of Frognal called the “greatest show on Earth.”
As we begin the London 2012 Olympic Games let us all hope that dramatic events are strictly left in the realms of Sport and that the Games pass without incident.
**Robert would like to thank Delia Solomon for her assistance in preparing this blog post.