France’s AXA abruptly announced that it was terminating its insurance coverage of the 2002 Soccer World Cup, scheduled to be held in Japan and Korea next May and June, following the terrorist attacks of September 11 in the U.S.
The company’s German subsidiary AXA Colonia, which was the primary underwriter, indicated that the ongoing war in Afghanistan, and the calls by Muslim extremists for a “jihad” had altered the situation to the point that former assessments of the risks involved were no longer valid. It set November 11 as the expiration date for the policy currently in force.
Reaction from FIFA, the international organization that governs soccer football, and stages the quadrennial World Cup Competition, was immediate and angry. FIFA President Sepp Blatter expressed shock at AXA’s sudden decision and said that there had been no prior warning that it intended to cancel coverage. In fact AXA Colonia had reaffirmed its commitment following the U.S. attacks.
Blatter affirmed that FIFA had observed all the conditions in its contract and had paid an initial premium of $10 million for the $865 million coverage package. He threatened legal action, and accused AXA of seeking a greater premium than the $16.9 million originally agreed on.
AXA’s original announcement last August described the coverage, which it arranged in conjunction with Munich Re, as intended to provide protection if any of the scheduled matches had to be canceled, primarily due to damage from earthquakes, and did not include any specific terms concerning security provisions, particularly against terrorism.
It indicated that it was willing to work with FIFA in finding a solution which would adequately cover the risks. Blatter was quoted by several news agencies as reaffirming that the games would go ahead as scheduled, but would probably cost more to stage. He also indicated that insurance cover was absolutely necessary, as most contracts involving sponsors and participants made it a mandatory condition.
So far there have been no discussions, but an AXA spokesman indicated that the company would be willing to consider renegotiating the deal to take account of the new threats.