Lloyd’s Comments on Rugby World Cup Insurance Coverage

September 20, 2007

Even though the U.S. has a team – The Eagles – in the finals of the Rugby World Cup, the event doesn’t exactly get the same press coverage as the Super Bowl or the World Series. Nonetheless for the 20 national teams that squared off in France on September 7 for the start of the six week long tournament (the final is Oct. 20), it’s serious business.

The game, played by 15 very large men (except the running backs) in shorts and jersey’s (no body armor) is the ancestor of American football. It is a brutal game, requiring a great deal of stamina and endurance. Hence games are usually scheduled a week apart to give the participants time to recover.

However, injuries to key players are only part of the worries that beset the organizers of the Rugby World Cup. As Lloyd’s points out in an article on its web site (www.lloyds.com) there are a number of other considerations that go into organizing a 48 game event, played in 12 stadiums, including some games in Wales and Scotland.

“It has become the third largest sporting event on the planet, only behind the Olympics and the FIFA World Cup,” Lloyd’s noted. “Over three billion people around the globe watched the 2003 event and the organizers expect that figure to be bettered for this competition.” Such an event requires extensive insurance coverage.

Lennox Batten, a sports specialist broker at Marsh, told Lloyd’s that the days leading up to the opening ceremony are the time of greatest liability to the organizers. “”The biggest fear for the organizers is cancellation. The last few days before the event is when liability is at its peak because the organizers will have spent the vast majority of the money they needed to stage the event, and until the first game, there’s no revenue being generated. The longer the event goes on the less the liability; because as the matches take place the exposure to claims for the organizers diminishes.”

While games are in progress, the “safety of fans entering and exiting the stadium,” takes priority. To properly assess the potential hazards requires “comprehensive risk management,” which both the insurers and the organizing committee undertake to assure.

One thing they can’t really do anything about is the weather, but it has to be taken into account. Lloyd’s noted that one of the semi-final games in the 1995 World Cup in South Africa “was delayed for several hours while water was removed from the pitch following a torrential downpour, creating fears that players may drown at the bottom of rucks if the game was played.” [Translation: when 16 guys, all of whom weigh well over 200 pounds, pile on top of one another in a fight for the ball, the guys on the bottom are frequently pounded into the turf/mud/water].

Batten also indicated that terrorist threats had to be taken into account. Several games in France have been designated as “high risk,” which involves putting on extra security guards.

Televising the games, which brings in a great deal of money, also has to be organized. Lloyd’s explained that the “French broadcaster will have the responsibility for physically covering the games and that feed will then be sent to the national broadcasters around the world who will upload the images and transmit them to their domestic audiences.

“For the organizers and the French broadcaster their liabilities finish when the images are transmitted to the international television stations. Therefore, the failure of a satellite that blacks out coverage in Australia or the UK, for example, will not come back to the International Rugby Board organizing committee.”

Batten added that for the “television stations their exposure increases as the event goes on because the audiences will become bigger. The rates for advertising slots for the semi-finals and the final will be multiples more than for the pool games. Failure to broadcast the latter stages of the event would be a huge financial blow.”

Finally there are the problems faced by catering and merchandising firms, who need to take out their own cancellation coverage. “For the firms that provide the catering for both the corporate hospitality and the fans in the stadium, the postponement of a game for weather or other circumstances – even for 48 hours – can leave them with huge amounts of food which will not keep until the rearranged fixture is staged,” Lloyd’s explained.

“Given the amounts of liability involved, much of the insurance will find its way to the major insurance markets, such as Lloyd’s,” Batten noted. “It does not need to be a direct issue with the venues of the competition itself to impact on the ability to stage it. As we saw in 2001, with the postponement of the Ryder Cup following September 11, there can be events outside of the country itself that can have an effect.”

Source: Lloyd’s

Ed. Note: Although rugby is a violent game, it has a very gentlemanly tradition, as one might expect given its origins at the English Public (i.e. private) School that gave the game its name. It shouldn’t be confused with soccer, which originated as a sport for the masses, most likely in the cow pastures of medeival England, which would explain why it’s played with the feet, and there are certainly no “rucks.” There’s an old saying describing rugby as “a game for thugs, played by gentlemen,” while soccer is described as “a game for gentlemen, played by thugs.”

So far the “gentlemen” from New Zealand – the All Blacks – have shown themselves to be the best of the best, but then rugby is NZ’s national sport. Host France lost its opening game to Argentina, while England unconvincingly beat the U.S. and was whitewashed by South Africa. Ireland has been struggling, and Wales and Scotland don’t appear to have teams that can match up to those from the Southern Hemisphere.

If France loses to Ireland in tomorrow’s highly anticipated encounter, it would be out of the tournament. This could even have political repercussions, as the national team coach, Bernard Laporte, is slated to become the Minister for Sport when the World Cup ends. The French hope he won’t be available to take up that office too soon.

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