World Cup insurers are likely to refuse to pay out on many cancellation contracts if Russia and Qatar lose the rights to hold the tournaments because of fraud, industry experts said.

Russia and Qatar could be stripped of their World Cup hosting rights if evidence emerges of bribery in the bidding process, the head of the audit and compliance committee of soccer’s governing body FIFA has said.

Lawyers and insurance specialists say many contracts could be annulled or go into dispute if governments, organizing bodies, or firms such as sponsors, broadcasters or hospitality providers have taken out cancellation insurance and are found to be linked to fraudulent action.

Others who took out such contracts and did not have knowledge of any wrongdoing could be paid out in full.

Russia and Qatar have denied wrongdoing in the conduct of their bids for the 2018 and 2022 tournaments, which were not the subject of recent charges announced by U.S. prosecutors against FIFA officials.

They are however the target of a probe by Swiss prosecutors against unidentified people on suspicion of mismanagement and money laundering related to the awarding of rights to host the 2018 World Cup in Russia and the 2022 event in Qatar.

U.S. prosecutors are also looking at how the rights were awarded to Russia and Qatar, according to a source with knowledge of the situation.

In the event of a government being found guilty of fraud, any state-owned companies could face considerable difficulties in claiming compensation if insurers thought they were aware of the fraud and did not mention it, said Richard Leedham, insurance partner at law firm Mishcon de Reya.

Given the size and complexity of the tournaments, and the number of insurance transactions taking place, a great many policies could end up being disputed in court.

“It won’t go away quickly and quietly,” lawyer Jeffrey Schulman said.

“There’s too much money at stake.”

Oxford Economics, a forecaster and consultancy, upgraded the likelihood of Qatar losing its hosting rights to medium risk on Thursday.

“Everyone’s Involved”

Sporting events like the 2014 World Cup in Brazil generate around $2 billion in cancellation insurance, according to data produced last year by insurer Beazley, which has provided cancellation cover for previous World Cups but declined to comment on 2018 and 2022.

That $2 billion reflects the enormous cost to governments and businesses involved in staging the tournaments.

Organizers, sponsors and others may not yet have taken out insurance, particularly for Qatar.

For those who haven’t already taken out insurance it may be too late, or at the least very expensive because of the fraud allegations and the possibility of cancellation.

This could particularly hit hotels and other businesses who may normally take out insurance closer to the event.

Rob Montgomery, senior underwriter for contingency at insurance company Ark, said: “We would not want to insure a burning building.”

The organizing of a World Cup event is estimated to cost around $1 billion for the local organizing committee, with financial backing from FIFA, insurance underwriters say.

Sponsorship, TV and broadcasting rights, and hospitality deals will add at least several hundred million dollars more to the cost of the events.

Local companies providing services for their country’s World Cup generally take out insurance with local insurers. Those insurers often then reinsure the contracts – which are for very large sums – in order to share the burden of any loss in exchange for part of the premium.

Specialist groups at the Lloyd’s of London market and major European reinsurers such as Munich Re or Swiss Re have reinsured previous World Cups.

“The cover will go to the big reinsurers and the Lloyd’s syndicates – everyone will probably be involved,” said David Boyle, underwriter for insurer ArgoGlobal’s contingency account.

International organizations, such as sponsors and broadcasters, tend rather to go straight to international insurers for their policies, said Amanda Lewis, class underwriter for contingency at Aegis.

Several Lloyd’s insurers and brokers and Gulf insurance specialists declined to comment. Munich Re also declined to comment.

“The most recent developments are unprecedented and we cannot speculate on the ultimate outcome given the current uncertainty,” said a Swiss Re spokesperson.

Grey Areas

Any cancellation insurance taken out by organizations found guilty of bribery or fraud would be voided by the fraud.

Event cancellation insurance usually covers issues such as terrorism or natural disasters such as hurricanes, which are outside the control of the insured organization.

But fraud is excluded as it is something of which the insured firm could or should be aware, and therefore seen as inside its control. (Additional reporting by Paul Arnold, Aashika Jain, Joshua Franklin, Jonathan Gould, Elizabeth Piper, Matt Smith and Bernardo Vizcaino.)