DBRS Morningstar has examined the growth potential of sports insurance [4] and how the insurable values of professional footballers were used by Lloyd's of London to accurately predict the winners of the FIFA World Cup.
Any sport involves risks, some of which can be covered by traditional insurance, especially for amateurs. Professional players, however, require specific coverage, mainly provided by Lloyd's of London and a limited number of property and casualty insurance companies.
For example, professional athletes are generally exposed to accident and third-party liability risks. Disability and accident insurance is therefore a necessity for these athletes. Professional leagues, event organizers, sports venues and clubs are exposed to other types of risks. These include infrastructure and equipment damage, general liability, directors and officers liability, business interruption and event cancellation.
Event cancellation is a coverage against the loss of income following the suspension of an event. This is the case for the 2020 edition of the Wimbledon tennis tournament. The latter has been cancelled due to the Covid-19 pandemic. The competition organizer, AllEngland Lawn Tennis and Croquet Club, has been able to recover 141 million USD in indemnities thanks to its insurance policy underwritten with Lloyd's, AIG, Argo, Chubb, Hannover Re, Tokio Marine HCC, Munich Re and Swiss Re.
These insurance needs, combined with an increase in sportsmen's remuneration and clubs' revenues, have given rise to a potentially fast-growing market whose revenue is expected to reach 600 billion USD by 2025. The premiums collected by Lloyd's for sports-related health and accident risks currently amount to over 150 million GBP (179.808 million USD).
According to DBRS Morningstar, the insurance sector has enough expertise and capital to provide coverage for major sports events such as the Olympic Games and the FIFA World Cups.
Read also | Lloyds predicts the winner of the FIFA World Cup Qatar 2022 [5]