IOC takes out insurance on Games

LONDON -- For the first time, the IOC has taken out cancellation insurance on the Olympics: a $170 million policy to cover the risk of the Athens Games being called off because of war, terrorism, earthquakes, or flooding.

The policy is not to compensate individual victims of any disaster, but to guarantee that the IOC and national committees and sports federations have enough money to continue operations.

The Athens Olympics, the first Summer Games since the Sept. 11 terror attacks, will be the most heavily guarded in history. The security budget is nearing $1 billion -- more than three times the amount spent on protecting the 2000 Sydney Games.

IOC president Jacques Rogge said yesterday that coverage for full and partial cancellation of the Aug. 13-29 games had been signed with a London-based syndicate of insurance companies.

The IOC is paying about $6.8 million for the policy, and the syndicate is led by New York-based insurance giant AIG, two Olympic sources, speaking on condition of anonymity, told the Associated Press. AIG had no immediate comment.

The contingency policy covers a "whole range of issues such as terrorism, earthquake, flooding, landslides, things like that," Rogge said.

He said the move represents "standard prudent judgment" and does not reflect any lack of confidence in the Athens Games, which have been troubled by construction delays and security worries. IOC finance chairman Richard Carrion said the scenario of Olympic venues not being ready on time is not covered by the policy, nor is the possibility of teams not showing for the games.

The Athens policy also protects the bulk of the 28 international sports federations on the Olympic program and the 202 national Olympic committees sending teams to the games. Many of those organizations rely heavily on Games-related revenue.

The policy is meant to ensure that the IOC and Olympic sports bodies can continue to operate for another four-year Olympic cycle if the games are called off.

Rogge said the IOC needs just more than $200 million to keep running in the event of cancellation. The committee already has about $160 million in financial reserves.

"We will certainly have the required amount after the successful completion of the Athens Games," Carrion said.

The IOC policy does not cover corporate sponsors or TV networks, which have billions of dollars riding on the games. Many have their own insurance. Host city organizers also underwrite their own liability coverage.

The IOC said it will also negotiate individual cancellation policies for future Olympics, including the 2006 Winter Games in Turin, Italy; 2008 Summer Games in Beijing, and 2010 Winter Olympics in Vancouver.

Rogge said the IOC began exploring insurance in 2001, but the industry was reluctant to offer terrorism coverage after the Sept. 11 attacks. The IOC had no coverage for the 2002 Winter Games in Salt Lake City.

Carrion said the IOC considered two other options -- taking out a credit line to absorb the bulk of the risk, and a combined insurance-credit arrangement for Athens and Beijing. The executive board decided in February to go with the standard contingency insurance.

Carrion said the IOC negotiated the bulk of the coverage before the March 11 bombings in Madrid that killed 191. Rogge said security has long been the IOC's top priority and that Greece has done "everything humanly possible" to safeguard the Games.Aside from terrorism, insurance experts say the main risk in Athens would be from earthquakes. Athens sits on a fault line. In 1999, a quake in the Athens area killed 143 people and injured about 2,000.