APC 2014 Annual Report Download - page 44

1OVERVIEW OF THE GROUP’S STRATEGY, MARKETS AND BUSINESSES
RISK FACTORS
Insurance policy
Schneider Electric’s general policy for managing insurable risks is scenarios prepared by the prevention company that carries out the
designed to defend the interests of employees and customers and audits of our industrial sites and, for earthquake risk, modelling
to protect the company’s assets, the environment and its carried out by specialized companies.
shareholders’ investment. Assets are insured at replacement value.
This strategy entails:
Shipping and transport insurance
identifying and analyzing the impact of the main risks;
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preventing risks and protecting industrial equipment; definition of
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The insurance program that covers all risks of loss or damage to
protection standards for sites (including when those are goods while in transit, including intragroup shipments was renewed
managed by third parties) against the risk of fire and malicious with the same insurer on January1, 2014.
intent, audits of the main sites by an independent loss
prevention company, roll-out of a self-assessment questionnaire
Erection all risk insurance
for the other Group sites;
drawing up of business continuity plans, in particular for the
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An erection all risk insurance program set up in 2011 to provide
Group main sites and critical suppliers;
cover for damages to work and equipment for projects taking
roll-out of crisis management tools by the Group’s Security
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place at our clients’ premises, was renewed in April2013 for two
Department; years.
carrying out hazard and vulnerability studies and safety
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Other risks
management for people and equipment;
implementing global insurance programs negotiated at the Group
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level for all subsidiaries with insurers meeting the criteria for
In addition, Schneider Electric has taken out specific cover in
financial position recognized by insurance and reinsurance players;
response to certain local conditions, regulations or the
optimization of financing for frequent, low amplitude risks
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requirements of certain risks, projects and businesses.
through retentions managed either directly (deductibles) or
Self-insurance
through captive insurance companies.
Liability insurance
To optimize costs, Schneider Electric self-insures certain frequent,
low-amplitude risks through two insurance captive companies:
The insurance program established on January1, 2012, for a a captive company based in Luxembourg provides property
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period of three years was pursued in 2014. This program deployed damage reinsurance worldwide capped at EUR 5 million per
on more than 70 countries provides coverage and limits in line with year and liability reinsurance outside USA and Canada capped
the current size of the Group and its evolving risks and at EUR17million per year;
commitments.
for the entities located in USA and Canada, an insurance captive
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Certain specific risks, such as aeronautic, nuclear and
company based in Vermont (USA) is used to standardize
environmental risk, are covered by specific insurance programs.
deductibles for civil liability, workers compensation and automobile
Property damage and business interruption
liability. These retentions range from USD1million to USD5million
per claim, depending on the risk. An actuary validates the
provisions recorded by the captive company each year.
insurance
The cost of self-insured claims is not material at the Group level.
The global insurance program put in place on July1, 2012 was
Cost of insurance programs
renewed as of July1, 2014 for a duration of two years. This is an
«all risks except» contract which covers events that could affect
Schneider Electric’s property (including fire, explosion, natural The cost (including tax) of the Group’s main insurance plans,
disaster, machinery breakdown) as well as business interruption excluding premium paid to captives, totaled around EUR25million
resulting from those risks. The EUR350million global limit of in2014.
indemnity has been increased for the largest sites. Certain
guarantees in particular, natural disasters and machinery
breakdown have lower insurance caps. These limits were
determined on the basis of available capacity on the market, loss
42 2014 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC