A strong partner creates trust

Munich Re's participation is sought for a variety of reasons. For example, sums insured of this magnitude require global capacity, which, however, can soon be in scarce supply. Brokers and their insurers therefore first turn to reinsurers like us in order to secure a share of these limited resources.

Moreover, brokers also know that it is easier to find co-insurers with less experience of contingency covers if a leading reinsurer is involved in designing the original conditions.

The challenge for us is in precisely monitoring and controlling our overall exposure. However, as handling accumulations is one of a reinsurer's core competencies, this is nothing new to us.

Winter Olympics Turin

A good example of this is the winter Olympics in Turin, which were held from 10 to 26 February 2006. As the leading reinsurer, Munich Re assumed two cancellation-ofevents policies for this major event. The policy for the local organising committee covered cancellation, abandonment, change of venue, postponement, interruption or curtailment of the games and the resulting repayment of revenues, especially for TV rights and sponsorship monies.

The main exposure was in weather risks, terrorist attacks or decrees of public authorities. In order to help minimise the risk, it was agreed to hold one of the showcase events, the men's downhill skiing, on the first Sunday of the competition in order to provide enough rescheduling flexibility should the event have to be cancelled for any reason. The sum insured for this policy came to US$ 200m for the first loss, with Munich Re taking a 30% lead line.

The second policy was for the International Olympic Committee (IOC). This insurance covered the cancellation of the opening ceremony and the complete abandonment of the competition once the games were under way. A change in the venue of individual competitions could therefore not result in a loss. The sum insured here was also concluded on a first-loss basis (US$ 150m); Munich Re's share was 36%.

2006 World Cup: Flexibility and financial strength

Insurance of the 2006 World Cup in Germany was negotiated between three main parties. (the world governing body of football), the national organising committee (OK) and the Hamburg-Mannheimer Sports GmbH, which is part of ERGO.

FIFA had already made enquiries regarding a cancellation policy in late 2002. However, following the terrorist attacks in the USA, no insurer was willing to accept a multi-year cover valid until the end of 2006. For this reason, decided for the first time in its history to cover its revenues through the capital markets. The traditional insurance policies on the other hand such as

• —
  liability (public/organisers'/pure financial loss),
• —
  personal accident and health,
• —
  legal expenses,
• —
  luggage,
• —
  motor, and
• —
  property

were concluded through Hamburg-Mannheimer. The same is true of the national organising committee, which declared Hamburg-Mannheimer its official insurer.

There were two principal reasons for this success. Firstly, Hamburg-Mannheimer Sports GmbH consistently refined its insurance products and adapted them flexibly to the needs of its business partners. Secondly, organisers as well as competitors are attaching increasing importance to financial strength.

Given the wide range of coverage concepts involved, know-how and international experience are of paramount importance for the coverage of big events. Munich Re more than fulfilled its role as the leading risk carrier at the winter Olympics in Turin and the World Cup in Germany.

« back  |  continue »