APC 2003 Annual Report Download - page 50

6. Insurance
Schneider Electric’s risk management strategy is
designed to defend the interests of employees and
customers and to protect the environment, the
Company’s assets and its shareholders’ investment.
This strategy entails:
■Identifying and quantifying risk using different
reporting systems.
■Preventing risks. Schneider Electric has always
sought to prevent major accidents at its industrial
sites and has reviewed its systems and procedures
to reduce risk even further. The new Triple A
approach applied since January 1, 2003 aims to
enhance processes to control and monitor risk by
identifying vulnerable areas and implementing
appropriate solutions to preserve the long-term sus-
tainability of the Company’s manufacturing resources
and business. This approach builds on preventive
measures already in place such as regular inspec-
tions, danger and vulnerability studies, safety man-
agement for people and equipment and security
plans. The Company also has ongoing programs to
prevent traffic accidents and reduce transportation
risk.
■Organizing and deploying crisis management
resources, notably for technical risks and natural dis-
asters.
■Ensuring the necessary insurance cover. The main
risks facing Group companies (civil liability, property
damage and operating losses, environmental acci-
dents, automobile accidents and transportation risk)
are covered by global contracts with insurance and
reinsurance companies of good standing, with the
same type of terms and limits applied to companies
of similar size.
In addition, Schneider Electric has taken out specific
cover in response to certain local conditions, regula-
tions or the requirements of certain risks, projects
and businesses.
The insurance and reinsurance markets were very
volatile in 2003 and premium rates were generally
high. In order to maintain essential levels of cover
while also optimizing insurance costs in this environ-
ment, we adopted a policy of self-insuring a certain
number of recurring risks, whose frequency and
financial impact can be reliably estimated. These
deductible management programs mainly concern
automobile, property and casualty/business interrup-
tion and liability risks.
All Group units are covered by a global liability insur-
ance program. Specific liability programs have been
set up in the United States, Canada and Mexico to
take account of the specific requirements and char-
acteristics of the North American market. Insured
values under these programs adequately cover our
exposure to liability claims in connection with our
businesses.
A global property and casualty/business interruption
insurance program has been set up for Schneider
Electric and its subsidiaries in all countries except for
the United States, Canada and Mexico where a spe-
cific program has been established to take account
of the specific requirements and characteristics of
the North American market. Aggregate settlements
under the global program are capped at € 230 mil-
lion and specific limits apply to certain risks, such as
earthquake damage and machine damage.
A global transport insurance program has been set
up for Schneider Electric and its subsidiaries in all
countries except for the United States, Canada and
Mexico where a specific program has been estab-
lished to take account of the specific requirements
and characteristics of the North American market.
The program covers all goods shipments, including
between Group facilities, by all means of transport,
with a maximum insured value of € 15.2 million per
convoy.
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