Insuring the unique risks of a football World Cup

The 2018 World Cup in Russia will be watched by more than one billion people—one in every seven of the global population watched the 2014 World Cup final between Germany and Argentina.

An event of that scale comes with a range of complex risks—on a large scale. Without insurance, there would be no World Cup and, equally, no Olympic Games and little other organised competitive sport.

To illustrate the scale of some of the risks involved, football’s regulatory body FIFA has earmarked $134 million for insurance for clubs whose players are injured—that’s more than a quarter of the prize money on offer to the 32 competing teams. This is the most political tournament in history, and has elevated the risk of the event.

Complex risks

Peter Williams, global product lead of live entertainment at Allianz, explains the varied and complex risks that must be insured at the tournament. Allianz is one of several insurers involved in protecting the event. The German insurer helps insure FIFA as well as the 2018 World Cup itself; it also partners with various national teams, including the current champions, Germany.

Through its subsidiary in Russia, Allianz has partnered with the government to insure infrastructure and stadiums, as well as liability programmes. Meanwhile, its personal lines businesses provide health and travel insurance to fans travelling to the World Cup as well as many special solutions such as event cancellation policies or “prize indemnity” to cover promotional risks for companies.

Williams stresses that these multiple and varied risks require different types of expertise and the participation of many parts of the company.

“There are different policies at play here,” he says. “We draw expertise from a variety of our resources here at Allianz. We also draw on the local expertise—we’re fortunate enough to have a robust organisation in Russia.

“We rely on the local organisation’s expertise and local engineering reports to make sure everything is well maintained and built properly.

“On my side, the entertainment live side, what we are interested in is the event itself running successfully—and not having people injured or a claim of that nature.

“Physical security of the game is a big deal, especially with the World Cup. On the physical side, we draw on our staff of engineers, who are experts in organising events that need crowd control.

“There are also independent experts: we work with consulting company Red 24, which looks at cyber and physical security. Cyber risks include somebody stealing credit card information—that cyber risk is potentially written by our financial lines people.”

Good security

Williams stresses that Russia has very sophisticated security measures in place, and from a cyber protection point of view, they are probably some of the most advanced in the world. “They don’t share exactly what they’re doing at a high level, or within their secret police, however,” he says.

“We are concerned about cyber terrorism—criminals may hack into the lighting for instance, if it’s a night game and shut it down. Or potentially hold hostages—which we are seeing a development of in the cyber world now.

“For example, they say ‘if you don’t pay us money, we will cause a blackout to your television transmission coverage’. These days, with a global viewership, we have to worry about TV revenues. The big driver of this is if the TV transmission is interrupted by a hack or cyber event.

“Unfortunately in this modern world, a cyber attacker can switch off the lights during a night game and cause chaos and mass panic,” he says.

“Even credit card machines—a majority of purchases at games or events (about 90 percent of the people) will use a credit card. That’s fine until there is a threat of someone hacking it and shutting it down.

“A lot of sophisticated measures are being taken by the local security companies, FIFA themselves and private contractors to protect the games.”

In terms of a more traditional terrorism threat, Williams says, the view is that the risk is higher because of Russia’s foreign policy in recent years.

“We look at terror—there’s an aspect in Russia, given their potential political involvement of a terror attack. Usually, security forces are involved in the local country. Red 24 also acts as a security consultant on this. They get high level information as to what’s going to be in place. All the experts we work with have confirmed Russia’s security is locked down very tight.”

Williams stresses that, unlike other parts of the market, it is almost impossible to comment on how rates and terms and conditions might change on such risks because the rates vary so much from event to event as there are many factors that can affect them.

“It is impossible to compare one event to another on this scale,” he says.

The preparation for such policies starts many years in advance, almost when the event is announced. He says clients will be in touch years ahead: even before the previous one is complete, the planning starts. He says Allianz is already talking about the 2028 Olympics Games in Los Angeles—10 years away.

The World Cup presents some unique challenges, however, because of the many cities involved and the sometimes vast distances between them.

“In North America, host of the 2026 FIFA World Cup, locations will include New York, Miami, Houston, Chicago, and Los Angeles and stadiums in Canada and Mexico.

“There are unique risks with each host location. You start to identify these locations, and the organising committee. With the level of the World Cup, you have a very experienced team that’s organising everything,” he concludes.