Blog: Lloyd’s World Cup predictor proves its value

football

The World Cup quarter-finals have been and gone, and now we are down to the last four in the competition. And - great news - England have made it to the semi-finals for the first time since 1990.

Although this might come as a surprise to some, Lloyd’s successfully predicted the Three Lions would progress to this point – and beyond. Applying Lloyd’s insurable-value model to all World Cup team squads, our prediction for the final is England v France, with Les Bleus just edging it.

Many countries’ economies are feeling the benefit of football fever. Should England, for example, make it to the final, it is estimated the boost to the economy could be as much as £3bn. Sales of food, alcohol and electronics are already seeing uplifts and pubs, restaurants and clubs could see almost £500m more alone.

It is likely brands will want to take advantage of the national mood and feel-good factor by offering promotions and there is an interesting insurance consideration for these brands to protect them from overwhelming demand. Over-redemption insurance protects companies against the over-popularity of a promotion. Companies offering promotions buy this type of insurance to protect themselves against any extra financial liabilities that could arise from much higher than predicted customer uptake.

Football fever gives rise to a range of offers and promotions, ranging from relatively small-scale offers such as “free drink for all customers if team X makes it to the final” to free cars and holidays. This risk can be transferred to the insurance market, where underwriters will consider several factors when pricing the policy, such as the likelihood that a promotion will be triggered and the expected number of people who will actually redeem the offer.

The success of Lloyd’s model will be put to the test again today (France-Belgium), tomorrow (Croatia-England) and Sunday (the final), so we will be taking a more detailed look next week at how accurate our predictions. To learn more about our predictions for the tournament, visit Lloyds.com/DreamTeam.

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