The 2018 Winter Olympics bring in the usual risks associated with international sporting events.

But this year, the location and political climate of the event's host country adds some risks to which insurers are not necessarily accustomed.

There are, of course, the usual risks for the Olympic Games such as event cancellation, exposure, abandonment, and terrorism. (The risk of a terrorist attack becomes higher with each Olympic Games.)

The internet's vast unknowns

Cyber insurance deals with some uncharted territory, including clashes between different lines of business, coverage of contingent business interruption, outages of external networks and internet, and security gaps.

This year, the need for cyber insurance surfaced quickly, first through unabashed Russian hacker interferences as retaliation for that country's doping ban, and then with the “Olympic Destroyer” malware, which aimed to shut down Feb. 9, 2018, opening ceremony of the Pyeongchang Olympics. It follows that the International Olympic Committee has taken out protection for around $800 million for the Olympic Games, covering the majority of the roughly $1 billion investment that the IOC made in the host city, according to Reuters.

Myriad other risks

What follows is a breakdown of the types of insurance necessary to run successful Winter Olympic Games.

There are monumental risks accompanying the major task of construction and infrastructure development of the Olympic arena. Construction insurance is purchased in order to guarantee the financing and completion of athletic and non-athletic venues. Construction insurance also is necessary as almost 3,000 Olympians will be competing in 15 different winter sports, all of which require specific facilities including the Alpensia Biathlon Centre, the Olympic Sliding Centre, the Phoenix Snow Park, the Jeongseon Alpine Center, and specific arenas for hockey, curling and ice skating.

Also, it is necessary to build several non-athletic venues including the Olympic Village, the Olympic Stadium and areas for the press and international broadcasting. While the insurance necessary for the construction of all of these sites can differ, it's safe to assume that the coverage is costly.

Liability coverage, specialty policies and more

Private Developer insurance includes surety and performance bonds, liability insurance, builders' risk insurance, and bid bonds. These types of policies protect from the various “what if” scenarios, from overspending on the build itself, to the destruction of people or property during the construction of the Olympic Games Arena.

Such “what if” scenarios become more pressing during construction of a site such as the Olympic Arena, which was on a very strict timeline. When construction projects are rushed, there is an increased probability that mistakes and injuries will happen.

This year's Olympic Stadium holds 35,000 people, so a construction mistake could lead to monumental bodily injury claims on top of property damage. If there's anything wrong with the ice, for instance, and an Olympian catches an uneven edge while practicing or performing a choreographed routine, the athlete could sustain a career-ending injury. Such a devastating incident caused uneven ice could spur a major lawsuit, making claims from such an injury potentially monumental.

What about the actual athletes?

During the Games, the Olympians themselves are often covered by insurance policies. Olympians need to train daily, often pushing their bodies to the limit, and they need assurance that any damage they are doing to their bodies on behalf of their country, is covered.

Olympians who are members of Team USA receive full health insurance coverage during the Olympic Games, compliments of the U.S. Olympic Committee. (Here's hoping Austrian snowboarder Markus Schairer receives equally solid medical insurance during the Games, in light of an injury he sustained during a quarterfinals competition in which he broke his neck.)

Since acts of terrorism or war are generally excluded from property & casualty insurance policies, political risk insurance, which covers disruption from terrorism or war, is offered as a standalone policy, or an add-on to property insurance. A political risk policy also will generally cover accident and health risks.

At these Olympic Games, the risk of terrorism or war is higher than usual as two of the participating countries, North Korea and the United States, have recently exchanged nuclear threats. What's more, North Korea and South Korea are technically still at war. Both of the Koreas, though, have made an effort to use the Games to reconnect. Case in point: North and South marched together as a unit in the Parade of Nations, and participated jointly in women's ice hockey.

All that glitters

Olympic medal insurance is also necessary as historically, several American Olympians have misplaced or lost their medals, or these singular trophies have been stolen.

For years, Liberty Mutual has insured each gold, silver and bronze medal won by U.S. athletes, noting how meaningful every medal is to the country and the athlete who earned the right to wear it. The company will continue to provide coverage for all medals through 2020.

With medal insurance in place, an athlete will be able to replace a lost or damaged medal at no additional cost.

Although no existing policy provides coverage for every aspect of the Olympic Games, piecing together insurance policies in this manner is an effective way to ensure that there is adequate coverage for the event, from start to finish.

Hannah Smith is a staff writer with FC&S Online, the recognized authority on insurance coverage interpretation and analysis for the P&C industry. To reach this writer, send email to hsmith@alm.com.

Dealing with terror

Terrorism and political violence call for review of insurance strategy

Special Reports /

PyeongChang Olympics present myriad risks for insurers

Related Stories

Recommended For You