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Law360, London (June 11, 2021, 1:51 PM BST) -- The global insurance industry could face a financial hit of up to $3 billion if the Tokyo Olympics is canceled next month, adding to the woes of event insurers already reeling from the COVID-19 crisis.
A report issued by Bloomberg Intelligence said that insurers and reinsurers will be "on tenterhooks" during the coming weeks as they wait to learn whether the Games will go ahead.
The giant sporting event, which is due to start on July 23, should have taken place in 2020 but was postponed because of the pandemic. Japan has vowed to push ahead with the international extravaganza this year, despite a resurgence in COVID-19 cases.
"Insurers and reinsurers will be on tenterhooks over the next six weeks as the Tokyo Olympics' opening nears, with any cancellation of the already postponed 2020 event potentially costing the sector $2-$3 billion in aggregate, based on our calculations," Charles Graham, senior industry analyst at Bloomberg Intelligence, said on Friday.
"That would hit an event-cancellation industry already battered by record 2020 claims," Graham added.
The numbers mostly tally with those from a financial analyst company, Jefferies, which said last year that it estimates the insured cost of the 2020 Olympics, including TV and sponsorship, to be as high as $2 billion.
Bloomberg said the International Olympic Committee is insured for up to $800 million for event cancellation. But other claims could come from the insurance of broadcasters, sponsors, sports teams and hospitality, the finance and media company warned.
Swiss Re said early in 2020 that it could face a $250 million blow if the Tokyo Olympics was canceled outright. Munich Re has also said it is on the hook for claims but has refused to put a figure on its potential exposure to a cancellation.
Allianz became insurance partner for the IOC at the start of 2021, but said it would not be a partner for the postponed Tokyo Olympics. However, the company said its corporate insurer, Allianz Global Corporate & Specialty, has a "low double-digit-million euro exposure" to another rescheduling of the Games in Japan.
--Editing by Ed Harris.
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