FIFA on Thursday dismissed a report on insurance fears over the 2010 World Cup, saying that both FIFA and the World Cup’s Local Organizing Committee have insurance in case South Africa fails to pull off the event. British paper the Guardian had reported that FIFA was forced to build a contingency fund worth $800 million because a recent assessment of the situation in South Africa by German insurance giant Munich Re failed to pass an initial sniff test.
According to FIFA director of communications Andreas Herren, the Guardian report was factually incorrect on several counts. Herren said that FIFA changed its insurance approach after the World Trade Center attacks in 2001, as it became “very to difficult to insure a major event such as the World Cup against cancellation.” FIFA therefore covered the cancellation risk in 2006 through “a capital market transaction,” which meant that Munich Re had not insured the 2006 World Cup, as the Guardian reported.
Herren added that FIFA had accumulated enough reserves after each World Cup to guard against the potential risk of the tournament being canceled. So in effect, FIFA insures itself against the World Cup failing. What it seeks is reinsurance in the event that FIFA has to cover itself. That plan, which would involve Munich Re, has not been put in place yet.