Race promoters join forces for 1.6bn insurance deal

04/02/2019
NEWS STORY

Last week's statement from the Formula One Promoters Association, which consists of 16 of the 21 races that form the 2019 F1 calendar, made clear that money is one of several issues that concern its members.

Other than ever increasing hosting fees, the movement of the sport behind the paywall that is Pay-TV, lack of initiatives and engagement from Formula One Management and concern over the revenue share deal offered to Miami (but nobody else), the bottom line is money, for in almost all cases the promoters only receive what they take in ticket sales, and as a result those events like Britain and Brazil which receive no government funding are particularly hard hit.

With an eye on cutting costs, an issue they insist Liberty should be addressing, the 16 promoters that are members of FOPA are arranging a joint insurance cover of 1.6bn, though the other 5 events running races in 2021 will have the opportunity to join the insurance deal if they want.

The move was agreed at last Monday's meeting of FOPA, a meeting which is understood to have left F1 boss, Chase Carey, "livid".

With cost-cutting high on the FOPA agenda, one of those attending the meeting told the Evening Standard that they "discussed the positive measure of trying to find insurance cover for all the races together because at the moment the 21 races have to contract insurance cover individually and it costs a fortune. It's the same cover so one single broker in London could do it and should do it."

"It's very easy to get the insurance," they add. "It's a logical thing. We just never did it because nobody thought of it.

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"We will go to a London insurance broker and say that it's standard insurance for 21 races, tell us how much the policy will cost. Each of us pays his part and that's the end of the story.

"It's a money saving idea which is what we discussed. It would be a very good contract and I'm sure we will be getting very good offers. It's very simple because these contracts have been in place for the last 40 years. We are going to talk to the brokers now."

Usually, Formula One Management takes out annual insurance policies which cover all the races, while its contracts also require each individual race organiser to arrange their own third party liability insurance covering personal injury and property damage during the Grand Prix weekend as well as the set-up and take-down periods.

The beneficiaries of these policies include the teams, drivers, F1 itself and the FIA.

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"Typically, these policies are at a level that we stipulate (often between US$75 million to US$100 million) having regard to the maximum amount available under local law or in local market conditions," F1 company documents reveal, adding that "the race promoter also indemnifies us... against any action brought by a third party... as a result of the death, injury, loss or damage to such third party as a result of the driving or using of a car belonging to the FIA or any competitor that is not the result of the negligence of any of these persons."

Thankfully, following the total overhaul of the sport's approach to safety in the aftermath of Ayrton Senna's death in 1994, in recent years fatalities in F1 have been rare. Since then, other than Jules Bianchi's death following his accident during the 2014 Japanese Grand Prix, the three other deaths involved marshals, one at the 2000 Italian Grand Prix, another a few months later at the 2001 season opener in Melbourne, and another in Canada in 2013.

However, insurance claims can also involve compensation for damaged cars, Haas having sought remuneration after a loose drain cover caused 500,000 of damage to Romain Grosjean's car during the 2017 Malaysia Grand Prix.

"I can report that we settled," revealed team boss Guenther Steiner last year. "Their insurance was good to deal with."

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Given the financial pressure that the majority of promoters are clearly under, one might have expected Liberty would have come up with this idea to ease the burden. Instead, the promoters are having to do it themselves.

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Published: 04/02/2019
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