Game on: Insuring the 2018 FIFA World Cup

Over 1 billion people — or one in every seven persons on the planet — watched when Germany took on Argentina in the 2014 FIFA World Cup final. The spectacular numbers allow FIFA, the sport’s governing body, to proclaim the quadrennial event “the greatest show on Earth.”

In terms of visitors, worldwide audience and prize money — $400 million — the World Cup outstrips the other great show on Earth: the Olympics. It’s not just the support of passionate fans that makes these events possible. Big or small, international or local, sporting events have an even bigger supporter — insurance. In fact, you can call it the “enabler.”

Without insurance, there would be no World Cup, no Olympics or little organized competitive sport at all. Few would take on the risk required to stage an event, particularly one the size of the World Cup.

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A number’s game

Given the scale of the event, its insurance needs are also spectacular. For this World Cup, FIFA has earmarked $134 million alone for insurance for clubs whose players get injured — more than a quarter of the prize money on offer to the 32 competing teams.

The World Cup and the Olympics are always on the radar. Staging either is an enormous risk for both the host country and organizers. The final bill for Russia is expected to be around $11.8 billion, excluding some new stadiums and costly infrastructure. There is also big money at stake from companies: advertising, broadcasting rights and sponsorship.

The cost of cancellation or postponement due to a natural catastrophe, infrastructure failure or a terror attack is great. Both Russia and FIFA have insurance that pays out if a game is abandoned, moved to another location, or if the World Cup is canceled.

While the World Cup has yet to be disrupted, an outbreak of foot-and-mouth disease in 2001 caused several Six Nations Rugby games to be postponed. In 2011, an earthquake hit Christchurch in New Zealand, forcing eight games of the Rugby World Cup scheduled for later that year to be shifted. Organizers were forced to offer ticketholders either refunds or new tickets at the other venues, hurting revenue. Here, contingency insurance protected against the fallout.

Among those who buy covers for such events are broadcasters, sponsors, travel firms, airlines and retailers. Lloyds estimates the total insurance for the 2010 World Cup in South Africa at $9 billion — $4.8 billion for stadiums and training venues and $4.2 for linked business opportunities.

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Protecting the players

Before the opening game, everything from the stadium and Lionel Messi’s legs (rumored to be covered for 750 million euros) to the ticket in a fan’s hand was insured in some form. Many fans will also have individual travel and health coverage.

The main difference between the World Cup and other insurable events is the value of the teams. Ahead of the 2014 World Cup, Lloyds estimated the total collective insurable value of the competing teams at 7.7 billion euros. Protection for the players comes on top of the other covers.

FIFA has an insurance program to cover injury to the players, payable to the national teams; the national teams themselves have insurance, such as liability and personal accident insurance for their players, while the players can have their own cover to protect their earnings.

Among other covers are fleet insurances (which cover team vehicles) and bonus payments insurance (for national associations to cover contract bonus payments if an underrated team unexpectedly becomes world champion).

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Analyzing the risks

Despite being the most political in history, the World Cup in Russia has only slightly elevated risks compared with similar events. Since the 1972 Munich Olympics, games have had to contend with the risk of terrorism. These games are only marginally higher given the political dimensions of Russia’s involvement in Syria and in the disputed Caucasus region (home to one of the host cities, Rostov-on-Don).

The risk of cyber terrorism, which was also a feature at the Sochi Winter Olympics in South Korea, also has to be considered. But perhaps the biggest individual risk is hooliganism. Euro 2016 was marred by brawling of English and Russian fans. While the Russian authorities have promised to tighten security, it cannot be discounted, so traveling fans are advised to have good international health and travel insurance.

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Michael Furtschegger is the head of entertainment international at Allianz Global Corporate & Specialty. He can be reached at michael.furtschegger@allianz.com.