It has learnt from the SARS outbreak, taking out pandemic insurance since 2003
Wimbledon is set to have a pay-out estimated at around £114m following its decision to cancel its tennis championships this year.
The All England Lawn Tennis Club (AELTC) has purchased pandemic insurance for the last 17 years, making it one of the few sporting events that is prepared for Covid-19.
If the sporting event was postponed instead of cancelled, AELTC would not be eligible for a pay-out.
One step ahead
Ben Carey-Evans, insurance analyst at GlobalData, said Wimbledon has learned from the SARS outbreak.
“Wimbledon has shown it is one step ahead of most businesses by having insurance in place for current events,” he said. ”It has been paying around £1.5m per year in pandemic insurance since it took notice of the SARS outbreak in 2003.
“It has paid out roughly £25.5m over the 17-year period, and it is set to recover around £114m, making it a very sensible investment.”
According to data from GlobalData’s SportCal team, Wimbledon earns around $160m in media rights, $151m in sponsorship and around $52m in ticket sales annually.
It will save $38.7m on prize money, and more on staff wages, but this still represents a significant loss of income, despite the sizeable insurance pay-out. Insurance represents damage limitation for the competition, and it will find itself in a much stronger position than most other events in the world during this period.
Other reputable sporting events such as the Premier League and The Open (golf) have been cancelled or postponed causing investors to lose a lot of investment, Carey-Evans added.
“This unprecedented disruption to events caused by Covid-19, and the significant pay-out to Wimbledon will surely see all event organizers around the world look to invest in this product in the future,” he said. “This could see pandemic insurance move from being a niche product to an essential one for sports and music organisers.
“But insurers will face challenges in pricing premiums due to a sharp rise in popularity and the significant level of risk attached to the product.”
Meanwhile, Damian Glynn, director; head of financial risks at Sedgwick International UK, told Insurance Times that brokers and event organisers would still need to pay careful attention as to which policies would respond in the event of another global pandemic.
“Just because one policy might respond, doesn’t mean they all will,” he said. ”In terms of events cancellations, some policies have responded, but what we need to understand is that these are usually stand-alone covers, and distinct from commercial combined policies (which will include business interruption, property damage and liability insurance, amongst others).”
Glynn added that any current policies paying out for a cancelled event would not affect ongoing negotiations surrounding business interruption payments: ”Any event cancellation payment or policy response is not going to impact any discussions on business interruption claims under consideration at the moment.”
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