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Multiple Risks to Watch Out For at 2018 World Cup

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Above: Luzhniki Stadium in Moscow 

The 2018 World Cup tournament began on June 14 and lasts until July 15. Thousands of fans will travel to Russia for the event, which consists of 64 matches and 32 teams in 11 cities. Like other mega events, it presents countless challenges for a number of industries including construction, travel, hospitality and security.

Circuit Magazine for security specialists reports that threat for terrorism is high, as there have been attacks in Moscow and the North Caucasus and most recently, a suicide attack on a Metro Train in St. Petersburg. It notes, however, that “Past performance in security terms of Russia at large events has been very strong, the Sochi Olympics was well controlled with no terrorist incidents affecting fans. Based on our assessment we continue to recommend that any attendance at large events, or corporate travel in Russia is supported by additional risk management measures.”

The article also recommends that attendees remain vigilant in public places, adding that to address this risk, security has been increased at airports and transportation hubs. It warns of street crime, including pickpocketing, that targets tourists. “Bogus police officers have harassed and robbed tourists.

If you are stopped always insist on seeing identification. Avoid openly carrying expensive items, or anything that might easily identify you as a tourist. Avoid walking about late at night alone,” Circuit warned.

Not to be overlooked are health concerns. The European Centre for Disease Prevention and Control (EU/EEA) recommends in a recent report that anyone traveling to Russia for the games make sure their vaccinations are up-to-date, particularly for diphtheria, hepatitis A, hepatitis B, measles, meningococcal infection, mumps, pertussis, poliomyelitis rubella and tetanus. According to the EU/EEA:

“As is often the case with mass gathering events, during the 2018 FIFA World Cup in Russia visitors may be most at risk of gastrointestinal illness and vaccine-preventable infections. The risk of being affected by gastrointestinal illness can be reduced by employing standard hygiene measures including regular hand washing with soap, drinking safe water (bottled, chlorinated or boiled before consumption); eating thoroughly cooked food and carefully washing fruit and vegetables with safe drinking water before consumption.”

It added that while outbreaks and spread of vaccine-preventable diseases are of particular concern during such mass gatherings. “there are no indications that the risk is higher than usual.”

Beazley notes that many of the 2018 World Cup’s risks impacting various industries will be covered by the London insurance market. The insurer outlines some of the key risks and their likely insured values:

Foo Fighters Sue Lloyd’s Over Terrorism Coverage

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Foo Fighters
The Foo Fighters said they are suing Lloyd’s of London for failing to reimburse them for scheduled concerts that were called off after the November terrorist attacks in Paris.
Loss adjuster Robertson Taylor is also part of the suit, which was filed on June 13 in federal court in Los Angeles.

The group canceled scheduled shows in Turin, Italy; Paris and Lyon, France; and Barcelona, after the Islamic State attacks because of threats, according to the Associated Press. Immediately following the Paris attacks, the Foo Fighters said, their website was hacked and the ISIS flag was displayed with an automatic weapon and a threat to “be prepared.”

The AP reported:

The band says in the suit that it believes it will be paid for the Paris and Lyon cancellations but alleges that Robertson Taylor advised underwriters against paying for canceled shows in Italy and Spain despite ISIS releasing a video threatening additional attacks in Europe.

The band is also suing the insurers for not paying for three canceled shows related to group leader Dave Grohl’s injured leg after a fall from a stage in Sweden last June.

Performers cancel shows for a number of reasons, but whether they are covered depends on details in their cancellation insurance policy. Terrorism is listed as a cause of loss by K&K Insurance. Other triggers include:

  • Power failure
  • Damages to leased or rented venues
  • Damage to surrounding venues or infrastructure resulting in lack of access
  • Natural catastrophe such as earthquake and flood
  • Adverse weather conditions (coverage is broader than rain insurance and there are no rain gauge requirements)
  • Non appearance of a principal speaker or entertainer
  • Inability to erect facilities at a venue
  • Disease outbreak (certain exclusions may apply)
  • Labor dispute/strike risks
  • Failure of TV broadcast
  • Any other previously unforeseen cause not excluded under the wording.

For more information about recent cases involving event cancellation, check out our recent article in Risk Management Magazine.

Cyber Blackout Could Cost Insurers $71 Billion, Lloyd’s Reports

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A cyberattack targeting the U.S. power grid would have widespread economic implications, resulting in insurance claims of between $21.4 billion and $71.1 billion in a worst case scenario, according to a report by Lloyd’s.

Lloyd’s and the University of Cambridge’s Centre for Risk Studies recently released “Business Blackout,” which examines the insurance implications of a major cyberattack using the U.S. power grid as an example. In the scenario outlined, malware is used to infect control rooms for generating electricity in areas of the Northeastern U.S. The malware goes undetected and locates 50 generators that it can control, forcing them to overload and burn out. The scenario, described as “improbable but technologically possible,” leaves 15 states in darkness, meaning that 93 million people are without power.

Economic impacts include direct damage to assets and infrastructure, decline in sales revenue to electricity supply companies, loss of sales revenue for businesses and disruption to the supply chain. The total impact to the U.S. economy is estimated at $243 billion, rising to more than $1 trillion in the most extreme version of the scenario.

Claimant types fell into six categories:

Power generation companies

• Property damage to their generators.

• Business interruption from being unable to sell electricity as a result of property damage.

• Incident response costs and fines from regulators for failing to provide power.

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Defendant companies

• Companies sued by power generation businesses to recover a proportion of losses incurred under defendants’ liability insurance.

Companies that lose power – companies that suffer losses as a result of the blackout.

• Property losses (principally to perishable cold store contents).

• Business interruption from power loss (with suppliers extension).

• Failure to protect workforces or causing pollution as a result of the loss of power.

Companies indirectly affected – a separate category of companies that are outside the power outage but are impacted by supply chain disruption emanating from the blackout region.

• Contingent business interruption and critical vendor coverage.

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• Share price devaluation as a result of having inadequate contingency plans may generate claims under their directors’ and officers’ liability insurance.

Homeowners

• Property damage, principally resulting from fridge and freezer contents defrosting, covered by contents insurance.

Specialty

• Claims possible under various specialty covers, most importantly event cancellation.

 Other key findings of the report include:

• Responding to these challenges will require innovation by insurers. The pace of innovation will likely be linked to the rate at which some of the uncertainties revealed in this report can be reduced.

• Cyberattack represents a peril that could trigger losses across multiple sectors of the economy.

• A key requirement for an insurance response to cyber risks will be to enhance the quality of data available and to continue the development of probabilistic modelling.

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• The sharing of cyberattack data is a complex issue, but it could be an important element for enabling the insurance solutions required for this key emerging risk.

Lloyd’s Could Lose $15 Million from Tour Cancellation

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Lead singer and vocalist Caleb Followill -- exhaustion or alcohol?

When the band Kings of Leon scheduled their international tour, they covered the far flung possibility of event cancellation with Lloyd’s of London, taking out a $15 million policy, according to Rolling Stone. And now, Lloyd’s may have to pay up.

At a Dallas, Texas, show just a few days ago, lead singer Caleb Followill announced mid-concert that he could not finish the show. In his own words, he was drunk and needed to leave to stage. The rest of the band members (consisting of two brothers and one cousin) apologized to the booing crowd. But those weren’t the only people to be upset and maddened by the lead singer’s actions.

Three days later the band cancelled their remaining 29-city American tour, citing Followill’s “vocal issues and exhaustion,” though it had been long rumored that he struggled with a serious drinking problem. And his bandmate’s statement on Twitter that read “I can’t lie. There are problems in our band bigger than not drinking enough Gatorade” did not help quell suspicions. From PropertyCasualty360.com:

“If he is truly sick, he’ll probably need a doctor to medically diagnose him,” says Paul Bassman, president of Doodson Insurance brokerage, the U.S. arm of U.K.-based Doodson Broking Group.

Though this is the most recent case of event cancellation, it is most definitely not the only instance. Big-name artists such as Mariah Carey, Britney Spears and Billy Joel have cancelled all or some of their tours due to various excuses, whether true or false. And in June, Lloyd’s filed a lawsuit requesting to nullify a policy it had with promoters of Michael Jackson’s canceled comeback tour.

Taking steps to insure an event or tour is a smart move for artists and promoters, but a sometimes risky and costly one for insurers.

For more on concert and festival risk, check out the June issue of Risk Management.