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Contingency

The Rugby World Cup: Tackling complex risks

The Rugby World Cup final on Saturday 31 October in London is a truly global event in more ways than one: By the time the final whistle is blown on Saturday an estimated total of 2.3 million international spectators will have packed 13 stadiums at 48 matches involving 20 teams. As rough as the action on the pitch can get, the complex risks of such a major sporting event are external. The key to understanding them is experience.

29.10.2015

The Rugby World Cup final on Saturday 31 October in London is a truly global event in more ways than one: By the time the final whistle is blown on Saturday an estimated total of 2.3 million international spectators will have packed 13 stadiums at 48 matches involving 20 teams. As rough as the action on the pitch can get, the complex risks of such a major sporting event are external. The key to understanding them is experience.
Despite the still limited number of nations playing rugby at the highest level, the Rugby World Cup is the third-most watched sporting tournament in the world after the Olympics and the Football World Cup. It has seen historic moments such as Nelson Mandela greeting the winning South African team in 1995 wearing the national rugby shirt – the sport for so many years having been seen as a reflection of the apartheid regime. But it has also seen challenges: The event made sad headlines when the 2011 Christchurch earthquake in New Zealand left both the rugby stadium scheduled to hold important matches and the city devastated, with no option but to relocate. The Paris final in 2007 between England and South Africa became much more complicated due to striking train workers. An early scare before this year’s event had even started was the legal challenge to South Africa’s involvement based on an allegation of racial bias in the team selection.  
The infrastructure needed to run such a large tournament is significant – some 2.3m spectators will have attended matches with at least 500,000 having come from outside the UK. A further 500,000 spectators will have watched games from the various fan parks around the country. The opening ceremony saw spectators’ return journeys significantly disrupted due to an accident at the railway station closest to the playing field. London’s public transport, like that of many large cities, operates at near capacity at all times, so any incident has far-reaching knock-on effects. Munich Re has numerous cancellation insurance and reinsurance interests amounting to a triple-digit €m exposure in this year’s Rugby World Cup.
Underwriting is conducted with significant dialogue with the insureds and brokers to understand risks and coverage requirements, and then tailor a policy accordingly. The wording is usually on an all-risks format with key exclusions and selected coverage buybacks possible.

Growing international popularity

Japan is looking forward to hosting its first Rugby World Cup, in 2019. The success of Japan’s team this year demonstrates how the game continues to grow healthily and develop outside the traditional strongholds. In 1995 the country suffered the highest number of points ever conceded – 145 – playing against New Zealand. This year Japan beat one of the tournament favourites, South Africa, in the group stages and the domestic television audience peaked at 25 million – some 20% of the country’s entire population. 
Munich Re has already been in discussion with numerous stakeholders to understand the risk profile of the 2019 Rugby World Cup, with special attention to windstorm and earthquake exposures. The underwriting approach is to a degree generic in that many of the mechanics and necessary preparations are repeated at every Rugby World Cup. These are conducted and supervised by skilled event practitioners recruited by local organisers or contracted third-party experts who have worked on large events in previous years. Particular attention must also be paid to the host nation – its large-event experience, infrastructure, political risk landscape, geographical exposure and contingency plans.
As rugby continues to gain in global popularity and more countries bid to host tournaments, Munich Re’s know-how can be a key asset in keeping the world-class sporting events insurable. By applying experience gained from many other large sporting events over the years, reviewing the preparations and benchmarking these against the necessary requirements to assume the requested risk transfer, Munich Re can support high-quality risk management.

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