Sports Terrorism, ‘Names,’ Tongues and Mergers

Are professional sports the next terrorist targets? The terrorist attack on Sri Lanka’s cricket team in Lahore (Pakistan) “highlights the vulnerability of sporting events to terrorist disruption,” warned Dr. Gordon Woo, terrorism risk expert at Risk Management Solutions (www.rms.com). “A characteristic of terrorist behavior is learning from success elsewhere.”

Woo stressed that “with concern rising over copycat attacks on other major sporting events,” their insurance coverage is liable to become increasingly expensive, including the 2012 Olympic games in London.

Arsene Wenger, the French manager of the Arsenal Football (Soccer) Team, added his concerns. He noted that sports, especially international competitions such as the Football World Cup, are high-profile events. His own team has received threats, but hasn’t publicized them. As a result, sports make tempting targets for “extremists.”

Woo noted, however, that the “terrorism insurance market has softened considerably since 2003, when FIFA securitized the risk of the 2006 Football World Cup being cancelled.”

The end of more than 20 years of litigation may be in sight, following a recent UK Appeals Court ruling in favor of Lloyd’s against claims of fraud by former individual ‘names.’ As Lloyd’s (www.lloyds.com) explained, the latest judgment upheld a July 2008 ruling that struck down “a claim brought by 50 names against Lloyd’s alleging that the description of reinsurance to close (RITC) in Lloyd’s brochures and its verification forms back in the 1980s was fraudulent.”

In that decision, Justice David Steel, found that Lloyd’s had not made any false representations with regard to RITC and that there was no evidence that Lloyd’s had acted dishonestly. He also held that the claim was “unquestionably an abuse of process.”

However, the Court of Appeal found that the names’ application to appeal was “totally without merit” and was “just part of the continuing abuse of process of the court by dissatisfied names who are perpetually trying to find new ways of accusing Lloyd’s of fraud.”

Lord Justice Longmore made the decision even more emphatic, stating that the litigation pursued by names “must now come to an end.” He held that extended civil restraint orders against the 50 names, preventing them from pursuing fresh litigation, must remain in place.

Lloyd’s General Counsel Sean McGovern called the decision a “complete vindication of Lloyd’s position through a decade of litigation,” adding that it “marks the end of perpetual litigation trying to reopen matters that have been definitively laid to rest by the Court on a number of occasions.”

Lloyd’s not only won its court case, it also insured a coffee taster’s tongue for £10 million ($13.78 million). The coverage on Gennaro Pelliccia, Costa Coffee’s Italian Master of Coffee, continued Lloyd’s centuries-old tradition of accepting unusual risks.

Pelliccia is glad to have the policy. He explained that his 18 years of experience enables him to distinguish between thousands of flavors, and to “search out any defects, which help guarantee Costa’s unique Mocha Italia blend.”

Lloyd’s noted that the “average tongue has approximately 10,000 taste buds, which means Costa has in effect insured each of Pelliccia’s taste buds for £1,000 (approximately $1,400). He’s not unique; over the years Lloyd’s has insured other tongues, notably for wine tasters and wine merchants. A Dutch wine maker, Ilja Gort, even insured his nose for £5 million ($6.32 million).

Sompo and NipponKoa, two major Japanese property/casualty insurers, have announced preliminary merger plans, as the trend toward consolidation continues. Japanese insurers are trying to reduce costs in order to cope with decreasing demand and an aging population.

The merger of the two would create a company with premium income of more than 2 trillion yen ($20.7 billion), putting it third in the Japanese non-life insurance industry with 25 percent market share. They would have a market value of about $10 billion.

Topics Mergers & Acquisitions Catastrophe Natural Disasters Excess Surplus Lloyd's Japan