The Boston Olympic bid committee yesterday revealed the details of its plan to host the most insured Olympic Games ever, provided it is selected to host the event in 2024.
Boston 2024 submitted a 13-page document Wednesday night delineating its proposed budget, including how it will mitigate and cover risk. According to the proposal, the local Olympic bid committee would seek out $500 million in insurance to cover a loss of revenue if an event is canceled due to a major disaster.
The committee also plans to purchase $500 million in public liability insurance, $250 million in terrorism coverage and $500 million in an “all risk” umbrella policy. Another $350 million would be spent on coverage for decreased ticket revenue if a major competitor drops out of the games, and $100 million would go toward cover for damages owed to the International Olympic Committee if the city becomes unable to meet its obligations to host.
Finally, Boston 2024 would buy up to $200 million in coverage in case an Olympic sponsor could not make its payments in support of the games.
The committee is also requiring venue contractors to carry insurance, including surety bonds.
All told, the committee plans to pay $128 million in premiums – a sizeable chunk of its $4.6 billion operating budget. It expects to use multiple carriers to furnish the needed policies.
The bid committee said it spent several weeks consulting with brokers and risk managers to create the insurance plan, and included a quote in the document from Randy Nornes, executive vie president of the insurance broker
Aon Risk Solutions.
“We have every expectation that the world’s insurance markets would enthusiastically support the Boston bid,” Nornes said.
Despite that assurance, other industry observers have not been as optimistic that every contingency will be foreseen and covered by insurance policies.
According to Boston College profession Patricia McCoy, a financial service industry expert and former US Treasury official, overruns are likely as no policy takes on all risks.
“Policies will generally cover a wide number of risks, but the important thing is then to see what risks do they exclude coverage of,” McCoy told the
Boston Herald. “In recent history, most Olympics involved overruns. Insurance does not cover that, period. It simply does not cover that.”
McCoy added that Boston 2024 has not disclosed information on what exclusions have been negotiated as pricing and final terms are still being discussed.
Boston 2024 is expecting to issue a request for proposals from insurance brokers by August 1 for further help developing the plan.
