Five Billion Dollars Risk Insurance for World Cup

May 11 - With only one month to go before the start of the soccer World Cup in South Africa, insurance companies around the world have been selling policies against cancellation or disaster in the host country.

The soccer world governing body, FIFA, sponsors, national organizers, advertising agencies, broadcasters and travel agencies have all taken out insurance policies to minimize their risk.

As is done for the Olympics, teams from insurance companies spend much time working out the mathematical dangers associated with the games and trying to make the risk measurable. The World Cup is planned to have a $5 billion risk associated with it.

Munich Re and Swiss Re, two of the world's largest insurers, will be shouldering most of the risk. Sabine Bach, head of contingency risk at Munich Re said that they will be holding $350 million of exposure.

Swiss Re is also holding a triple figure million amount according to Hans J.R Steffen, company special risks specialist.

Other insurers such as Allianz and Hannover Re are also holding risk in the soccer world cup and many re-insurers are involved as financial backstop for risks that are too large for small insurance companies to be able to handle on their own.

The World Cup is to be played in Africa for the first time from June 11 to July 11. The risk of natural disasters in South Africa is not on the same scale as some natural catastrophes such as earthquakes or hurricanes, or even man made disasters such as the sunken oil platform that can be found in the Gulf of Mexico.

Regardless, the coverage for the World Cup is a big business deal for the worldwide insurance industry.