As the Paris 2024 Olympics approach, insurers are increasingly anxious about the potential impacts of militant attacks and AI-generated disinformation, which could lead to event cancellations and substantial insurance claims.
The delay of the 2020 Tokyo Olympics due to the COVID-19 pandemic resulted in significant financial losses for insurers. This, coupled with ongoing conflicts in Ukraine and Gaza, and a year marked by numerous elections, including in France, has heightened fears of politically-motivated violence at major global events.
The Olympic Games are scheduled to be held in Paris from July 26 to August 11, followed by the Paralympics from August 28 to September 8. German insurer Allianz is the official insurance partner for the Games, with other insurers, including Lloyd’s of London, also providing coverage.
Eike Buergel, head of Allianz’s Olympic and Paralympic program, acknowledged the global geopolitical tensions but expressed confidence in the measures being taken by the International Olympic Committee (IOC), Paris 2024 organizers, and French authorities to address potential challenges.
Security concerns, particularly regarding Islamist attacks, remain paramount. Andrew Duxbury, head of contingency at insurer Beazley, highlighted the difficulties of policing such a large event in a major city. In response to potential threats, France has indicated it might relocate the opening ceremony from the River Seine if specific security risks are identified.
In May, a man in Saint-Etienne was arrested on suspicion of planning an Islamic State-inspired attack on a soccer stadium during the Olympics. Adam Carrier, head of consulting at crisis management consultancy AnotherDay, emphasized that such incidents underscore the real and ongoing threat to the Paris Olympics.
Insurers recently met with the IOC in Paris to discuss risk mitigation strategies. The IOC, in an emailed statement, described risk management as an “essential” part of its operations to minimize the impact of unforeseen events on the Games.
A potential flashpoint for security concerns is the participation of the Israeli team, given the ongoing military conflict in Gaza. Marcos Alvarez, managing director for insurance ratings at Morningstar, noted that an attack causing significant loss of life, property damage, and business interruption could substantially increase the estimated $3 billion in insurance losses projected for a hypothetical COVID-19 cancellation of the Tokyo Olympics.
The IOC typically secures approximately $800 million in insurance coverage for each Olympic Games, with policies purchased several years in advance. Due to confidentiality agreements, the IOC cannot disclose specific contract terms, but the insurance policies cover a range of unexpected events to offset operational costs.
In addition to the IOC, the Paris organizing committee and national committees also purchase insurance. Broadcasters, sponsors, and travel firms usually secure coverage about a year before the event, while hospitality providers tend to buy insurance closer to the date.
Standard event cancellation policies have excluded terror attacks since 9/11, but separate coverage is available for such incidents. Companies vulnerable to losses from strikes, riots, and civil commotion can also obtain insurance.
With France preparing for the second round of parliamentary elections on July 7, businesses are on alert for potential protests that could lead to property damage. Edel Ryan, an executive at Marsh’s UK sports and entertainment division, warned that AI-based attacks could disrupt the Games by targeting ticketing systems, committing fraud, or manipulating live broadcasts.
Olympics organizers have contingency plans to reschedule events if necessary, though this could be challenging given the tight schedule, potentially leading to cancellations. Imogen Mitchell-Webb, head of sports at insurance law firm HF, noted the logistical difficulties, stating, “There is no room to reschedule things.”
($1 = 0.9348 euros)
