Is World Cup 2010 Insured, or Not?

April 3rd, 2008 | by: Daryl | Comments(1)

Two conflicting stories emerged yesterday. On one hand, The Guardian were claiming that FIFA were struggling to find anyone to insure against World Cup 2010 collapsing. They quote a spokesman for insurers Munich Re as saying “The situation is quite difficult and fluid. The problem is they need 10 stadiums and some of these are rugby grounds that are run-down and in a very bad condition.”

The Guardian also quoted some very non-specific sources, claiming that “A Fifa insider admitted that insurance companies also had concerns about security, transport infrastructure and the local political climate” and that Blatter and buddies are building up an $800 million fund of their own, just in case they have to do some hasty re-organizing elsewhere.

FIFA director of communications Andreas Herren was pretty quick to respond, telling South Africa’s Cape Argus: “As per the host organising association agreement, Fifa. as the rights holder, and the Local Organising Committee (LOC) both have insurance.”

Then he muddled things a bit with this long rant:

In fact, Fifa had changed its insurance approach post the September 11, 2001 attacks, as it has become very difficult to insure a major event such as the World Cup against cancellation and therefore had covered the cancellation risk in 2006 through a capital market transaction.

Not only are the costs of insurance prohibitive but the available policies also contain many exclusion clauses and can often be concluded only on an annual, renewable basis,” he said.

Furthermore, it is not correct that Munich Re had been the insurer of the 2006 Fifa World Cup as reported by the Guardian. In fact, there was no such cancellation insurance in place for the 2006 event.

He also told the Cape Argus that “Fifa had accumulated enough reserves after each World Cup to be able to cover potential risks of cancellation of future tournaments by Fifa’s own equity reserves.”

So at the end of all that… is the World Cup insured or not? Even if not, it sounds like FIFA has enough money to cover the event. And they ought to after the last World Cup was plastered with credit card and beer commercials and the tv rights sold around the world. I’m sure FIFA aren’t short of a penny or two.

More importantly, let’s hope we don’t need to worry about insurance and the World Cup goes ahead, and goes smoothly, in South Africa as planned.