Covering the Cup on and off the pitch

Originally published in Post Magazine and Post Online - June 2014

Ahead of the 2014 Football World Cup, Sportscover Europe Business Development Director Paul Thomas looks at the variety of insurance risks facing the competition.

By Paul Thomas, Business Development Director at Sportscover Europe

June, 2014

The FIFA 2014 Football World Cup kicks off on the 12th June, bringing together 32 teams and fans from around the world “All in one rhythm”, as the organiser’s advertising slogan says, revelling in a festival of sea, sun and Caiprinha cocktails.

Most sports fans are looking forward to this particular football World Cup, which takes place in what many would describe as their second favourite footballing nation behind their own. International risk and insurance companies will be particularly interested in events in Brazil, as they will have provided billions of dollars' worth of coverage for the month-long carnival of football. The event promises to be engrossing or even “espectacular”, as they say in Brazil, so what could possibly go wrong? The answer, of course, is plenty.

Only two things in life are certain: death and England getting knocked out of the World Cup on penalties in the second round (with the bullish assumption that England negotiate the Group stage), but the insurance community won’t know for certain what its final liability for the event is until the last fans and players land back in their home country – and maybe not even then.

From TV screens going blank during the game, to travel problems, terrorist attacks and freak weather conditions, the Lloyd’s and London insurance markets play a key role when it comes to managing the risks of big tournaments.

This summer’s tournament will carry its own particular risks. Not everyone in Brazil is football mad. There have already been huge local protests against the World Cup investment in infrastructure at the expense, allegedly, of the Brazilian population.

It was reported in April this year that human rights campaigners had sounded the alarm about proposed Brazilian anti-terrorism legislation that they fear will be used to crack down on legal protests during the event. The government for its part says that it needs the new law before the tournament because the event could be a target for “violent extremists” – a statement that will clearly alarm Sports and Political Risks Underwriters alike.

The heat factor will be another concern – as has already been reported for the Qatar 2022 tournament - for insurers as it could add to the risk for both players and spectators. When previous World Cups were played in Brazil, games were scheduled for cooler evenings and players were given time to acclimatise, however, the England team have been drawn to play its first match in Manaus, where temperatures are usually above 30C and the humidity saps strength. The potential for heat stroke for fans and players alike are clear.

Parent clubs or National Associations typically buy personal accident insurance to cover costs should a player become temporarily injured, permanently disabled or die in an accident, and players also can buy insurance to cover loss of income if they suffer a career ending injury. In the UK this is unlikely to arise as a result of heat stroke but insurers will be offering advice to fans to be aware in Brazil – particularly when drinking alcohol – and the same goes for the England players!

Because football is no longer just about football, competitions and offers will also be taking place in practically every nation on the planet, and when it comes to contingency insurance, there is a vast range of potential coverage. Competitions, offers, prizes, sponsorship, broadcast rights - all companies with financial stakes will need insurance coverage. There will be many organizations with a financial interest in this year’s tournament taking out insurance cover to protect against cancellation or other types of disruption.

Remember this summer, as the last England penalty sails sadly over the crossbar no doubt into a glorious Brazilian sunset that the UK insurance market still leads the way in insuring the globe’s sporting events large or small, conventional or unconventional. This year’s World Cup will be no exception. All events, whether it’s the smallest school fete or a major international sporting event present their own risks and liabilities and this is one discipline I am pleased to say in which the UK excels.