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LONDON-Bad weather and other contingencies can interrupt or even cancel major sporting events, but insurance coverage is available to protect organizers and corporate sponsors when the show can't go on.
This year in Britain, for example, heavy rain in recent weeks has caused some major upsets for sporting events. A host of sporting events scheduled for June, ranging from tennis tournaments to horse racing to cricket, were delayed or rained out.
June was the wettest month this century in Britain, in sharp contrast with the previous two summers, which were the country's driest in 200 years.
As a result, while last year's excellent summer weather resulted in very few claims on weather-related insurance policies, underwriters in recent weeks have been paying out quite substantial sums, said John Lear, pluvious underwriter at Eagle Star Insurance Co. Ltd. in Cheltenham.
As a result of the deteriorating weather, "I have been working overtime to handle the claims that are coming in," he said. But Mr. Lear added that he has been equally busy handling the new business "arriving daily." Eagle star writes "pluvious insurance," which protects against losses stemming from adverse weather conditions.
Rain created major interruptions at the recent Wimbledon Lawn Tennis Championships for the first time in decades. Over the first four days of the tournament, a full number of scheduled matches was played only on the first day. On the second day, just two scheduled matches were completed before rain delays, while the third and fourth days were completely rained out-the first time in 88 years that two consecutive days of tournament play were rained out.
A spokesman for the Wimbledon-based All England Lawn Tennis & Croquet Club, which organizes the tournament, said the club is insured for refunds made to ticketholders of rained out events. The club would not disclose any other details of its insurance cover.
The club issues refunds only to spectators with tickets for the three main courts-Centre, Court 1 and Court 2-who are entitled to refunds for the two days when there was no play due to rain, or any other center court matches that were delayed.
However, the majority of spectators holding general admission tickets are not entitled to refunds.
The need to refund ticket proceeds is rare. Since 1920, only 10 days have been totally rained out at Wimbledon, said Mr. Lear of Eagle Star.
Cricket is another seasonal sport that has been sidelined by poor weather.
Cliff Barker, financial director and deputy chief executive of the England & Wales Cricket Board, said that up until a few years ago the board purchased full insurance coverage in the commercial market to protect it against lost revenues due to weather-related cancellation.
However, the ECB then decided that as it is relatively rare, even in Britain, to lose much play due to rain, it would self-insure part of the cost of any ticket refunds, with the remainder of any refund costs insured by underwriters at Lloyd's of London.
Mr. Barker declined to give further details on the cricket board's coverage. However, he said the ECB's policy is to refund the full ticket price on days of no play and 50% on days of partial play.
One of the season's major ECB-organized cricket events is the annual Test Match in June at Lords Cricket Grounds in London. This year, one day of no play and two days of partial play due to rain cost the ECB and its insurers 1.3 million pounds ($2.2 million) in ticket refunds.
Another of Britain's major annual cricket events, the Cornhill Test Series, also has run into bad weather.
Cornhill Insurance P.L.C., a London-based unit of Allianz A.G. Holding, sponsors the series, which consists of six matches lasting five days each.
A Cornhill spokesman said the insurer buys no special insurance in connection with its sport sponsorship activities. Any protection that Cornhill requires is written into the contract with the event's organizer, the ECB, or comes under the company's standard liability policy.
"Even our hospitality marquee is the property of the ECB and so is insured by them," he explained.
Inclement weather is not the only risk for which event organizers seek insurance, however.
For example, it's a little-known fact that 97-year-old Queen Elizabeth the Queen Mother-Queen Elizabeth II's mother-figures prominently in coverage-buying decisions for most professional sporting events in Britain.
Many organizers and some corporate sponsors of high-profile sporting events take out an insurance policy covering the risk of cancellation due to the death of the revered matriarch of the British royal family.
Insuring against cancellation in case of the Queen Mother's death has become common over the past five years for sporting event organizers and sponsors, according to Richard Woods, a broker with London-based Tyser & Co., which specializes in abandonment insurance.
Terrorist activity is another contingency for which U.K. sporting event organizers and sponsors almost always arrange coverage. Sporadic bombings by Irish Republican Army terrorists in Britain mean this risk typically is excluded from basic sporting event policies but is available as a policy endorsement for an extra premium.
Unlike event organizers, corporate sponsors of sporting events usually do not need insurance for cancellation and abandonment risks because sponsors' contracts generally stipulate that they do not pay if an event is canceled, according to Jonathan Ticehurst, director of sports insurance at London-based Windsor Insurance Brokers Ltd.
However, corporate sponsors commonly buy insurance that would cover any losses if an event scheduled to be televised was not for some reason, Mr. Woods said.
Corporate sponsors of sporting events typically rely on two basic coverages to cover their exposures, according to Mr. Ticehurst:
Public liability insurance.
Usually the sponsor would need this if the sponsor has its own marquee, or hospitality tent, at the sports ground. However, it is also possible to insure against liability from some major incident or catastrophe. In such a case, while the organizer and its insurers would be first in line to pay any claims, claimants also may seek to recover money from event sponsors.
Prize indemnity insurance.
This form of insurance covers any extra payment a sponsor agrees to make if an individual or team wins a prize or achieves a level of athletic performance agreed in the contract. For example, a sponsor could offer to pay a large cash prize to a golfer who makes a hole-in-one at a sponsored tournament.
Phil Bell, liability underwriter at Royal & SunAlliance Insurance Group P.L.C., said corporate sponsors also insure against non-appearance of key people, such as sports stars or celebrities.
Royal & SunAlliance itself sponsors a number of sporting events.
Angus Jordan, risk financing manager at the insurer, said the company makes few special insurance arrangements for its sponsorship activities. Instead, Royal & SunAlliance typically relies on its standard corporate liability insurance policy to cover any exposure from its sponsorship interests and hospitality activities at events, he said.