There are no medals given out to brokers, underwriters and risk management experts charged with assuring a safe, secure–and insured–Olympics, even though all three insurance functions must be winners to help the world's biggest sporting event make it to the finish line in one piece.

With the winter Olympics in Torino, Italy just recently completed, attention is turning to the 2008 summer games, to be held in Beijing, China. To call the Olympics a massive undertaking for anyone involved in risk management and insurance is an understatement.

The number of participants alone presents an exposure of staggering magnitude. According to the official Web site for the Torino event, more than 2,500 athletes attended the games, accompanied by over 2,700 trainers and escorts from 80 countries. The games involved some 2,500 paid staff, 18,000 volunteers and thousands of media representatives.

In addition, there were thousands involved in support services such as doctors, nurses, security, drivers–plus tons of equipment, including computers, fax machines, and 3,900 cars and buses. There were also hundreds of thousands of visitors and spectators on hand.

All of that requires coordination, planning, and, of course, comprehensive insurance and risk management programs.

In October, Marsh announced that it was selected to provide insurance consulting and risk management services for the 2008 Beijing games after a highly competitive selection process involving several other brokers. Marsh said it would be providing the services in collaboration with China Sports Insurance Broker Company, Ltd.

According to Warren H. Harper, a global events practice leader and senior vice president with Marsh, the work the broker will be doing in Beijing will be little different from what it has done in the past with other Olympic events.

Mr. Harper said that typically the broker would identify risks and advise what will be needed to mitigate those exposures, whether that means development of loss and safety controls or the transfer of risk to insurers.

Marsh's responsibilities will also require contract review, development of wording of contracts, acting as a liaison and adviser with prospective insurers, and dealing with any capacity issues if they arise, he noted.

The broker's experience goes back to 1992 in Barcelona, Spain, where its forerunners, such as Johnson & Higgins, were involved in the games.

Despite this being the first time China has ever hosted the Olympics, Marsh has resources in Hong Kong and Beijing to handle the work. For China Sports, noted Mr. Harper, it means an opportunity for that firm's brokers to learn more about risk management on a grand scale.

“This is an educational experience both ways,” said Mr. Harper. “For us, as consultants, we have to put our prior experience with the games into context. For them, some of the technical aspects of risk management are fairly new, especially for an event of this size.”

However, he said he has been pleased with the pace of learning by the China Sports' team. “They have been extremely diligent and have done a lot of research prior to these games,” he said. “They have been making up the learning curve very quickly.”

Mr. Harper said he could not comment on insurance placements at this time because they are still in the works.

In the past, the Olympics faced a number of challenges as far as risk placements. Notably, said Mr. Harper, this has concerned cancellation coverage, standard property and liability, personal accident for those involved in the games (including players, referees and volunteers) as well as auto coverage (which is sometimes picked up by the host country, state or a sponsor). For the summer games, it also includes marine and indemnity related coverage for sailing events.

Joe Addison, managing director of Aon's Entertainment Practice Group, pointed out that based on his firm's own involvement in past Olympics–also traced back to 1992 in Barcelona–it is not the International Olympic Committee, but the local organizing that has to be worried about risk transfer.

“It is an event that has the spotlight of the world on it,” he said. “The major concerns have been slips and falls and property damage. In that sense, it is no different from a ski resort. How do you move people on and off a lift? That concern has not changed. What has changed is the concern with terrorism, and security has to be phenomenal.”

No matter how experienced a broker might be, however, the biggest challenge is anticipating future risks. “Every day is a new world–there is always something we have not prepared for,” said Mr. Addison. “There is that 95 percent that we are prepared for, and then there is the 5 percent we are not.”

He said there is plenty to be learned from past experiences, but more importantly, communication between brokers and carriers “is vital to the long-term protection” of the games. “Each event has a unique exposure,” he noted.

Cancellation coverage is one of the most vital risk transfers connected to the games, he said. Its importance was underscored in 2004 when, for the first time, the IOC secured $170 million in cancellation coverage for the summer games in Athens.

When it made its announcement, the IOC said it would buy the coverage for the just-completed winter games in Turin, the Beijing games and the 2010 winter games in Vancouver, Canada.

“Taking out a policy to manage the risk associated with one's core business is standard, prudent behavior for any modern organization,” said Jacques Rogge, IOC president at the time.

Having such coverage, said Mr. Addison, is not just limited to the IOC and the local committee, but is also something television networks, hotels, restaurants and others who will be depending on revenues generated by the games should be looking into, he advised. He said the coverage is traditionally tied to a combination of expected revenue and expense.

He added that it is never too early for a client to purchase the coverage. In fact, capacity issues may make it impossible or prohibitively expensive to buy such coverage as the event draws near, he warned.

It is also important for the committees to broaden their coverage under an umbrella policy for a number of exposures, he observed. “At the end of the day, you need a local policy in place to satisfy the issues of that country,” said Mr. Addison. “It's a whole process from the very beginning. It's not a renewal.”

“The world of entertainment/events has changed dramatically,” Mr. Addison added, “and I think it is really something people need to take a proactive approach to looking at the risk associated with it. There is nothing worse than having a massive claim, and then the committee can't shut down for five- or 10 years because they are dealing with open issues.”

For the Beijing games, the marriage of risk transfer and the excitement of athletic competition will be another learning experience for the brokers involved in the games.

“From a personal perspective, I'm really looking forward to working with the [Beijing Organizing Committee of the Olympic Games] because it is fascinating to learn more about the society and the culture,” said Mr. Harper. “That is without match. It will be a great experience not just for us working on this directly, but for the rest of the world.”

Special Reports /

Brokers, Insurers Go For Olympic Gold

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