The number one question that Boston 2024 must answer in order to win over residents remains the one pertaining to financial risk. While other major issues would remain, the possibility of assuaging the city and state’s worries about bearing the risk of cost overruns is a top priority for the bid. The main Boston 2024 strategy to accomplish this goal is found in the multilayered insurance plan, meant to cover any unforeseen budgetary problems.
In a new release on Thursday morning, Boston 2024 outlined the basic structure of how the insurance plan would work.
“Following extensive due diligence with insurance experts, I can say with certainty that Boston will have the most insured Games in Olympic history,” bid chairman Steve Pagliuca said in a release.
Boston 2024’s vision for the insurance plan is one that extends in several levels, for specific venues as well as “overarching excess coverage.”
To this point, no specific insurers have been identified, though the bid noted that the “request for proposals is expected to be issued by August 1.”
Finding the necessary proposals (and, were Boston 2024 to get the bid, eventual coverage) will be historically difficult.
Much of Boston 2024’s insurance plan would be unprecedented, both in its coverage and scale. This, as Boston College law professor Patricia McCoy noted to the Globe earlier in July, poses severe challenges.
“Insurers do not cover risks that are certain to materialize, and almost every Olympics in the recent past has had major cost overruns,” McCoy explained.
Boston 2024 is not helped by obvious disagreements in the budget estimates. Consistently labelling the “2.0” budget as “conservative,” the bid will have one crucial factor to inevitably explain to possible insurers: the cost of the 60,000-seat temporary stadium.
Smith College professor and economist Andrew Zimbalist explained why this is an issue in a recent interview with BostInno.
“You don’t build a 60,000 capacity Olympic stadium out of steel structure for $175 million and call it ‘conservative,'” Zimbalist pointed out. “Maybe they got some architectural and engineering company to come along and say this is viable, but to say that it’s ‘conservative’ is silly.”
Chicago’s failed bid for the 2016 Summer Games also planned to use an insurance model to protect against financial dangers. Yet because the bid didn’t win, experts were never able to see the plan in action. Boston remains the proving ground for such an extensive concept.
And the added challenge, perhaps unique even from Chicago’s bid, is the level of transparency being demanded of Boston 2024. While critics of the bid continue to maintain (with many legitimacy in many cases) that Boston 2024 is not transparent enough, the simple fact is that it has been the most transparent Olympic bid in recent history.
Critics have pointed out that even if Boston 2024 is able to attain the various insurance that it desires, risks will remain. In a statement made after the insurance plan was released, No Boston Olympics had this to say:
Boston 2024’s proposed insurance has Olympic-sized gaps that fail to protect Massachusetts taxpayers. The boosters admit they will not cover cost underestimates and scope changes. Not coincidentally, these have been the main drivers of overruns for previous Olympic host cities. If the boosters are so confident in their financial projections, why are they still asking taxpayers to provide a guarantee to cover Olympic deficits? Boston 2024’s sales pitch is an attempt to distract from the significant risk associated with an Olympic bid.
Regardless, the insurance plan, like much of the bid itself, will continue to be hotly debated as the September deadline for official Olympic bid declarations quietly approaches. Boston 2024 could very well make the bold plan come to fruition, but it is yet another example of how the local bid has a more challenging road than its international competitors.
Image via Boston 2024
