EDF_REGISTRATION_DOCUMENT_2017

RISK FACTORS AND CONTROL FRAMEWORK Insurance

2.5.3

CIVIL LIABILITY INSURANCE (NOT INCLUDING NUCLEAR CIVIL LIABILITY)

Objectives The insurance policy stipulates the risks that the Group decides to transfer to the market and the general principles for optimising such transfers: grouping purchases by setting up Group insurance programmes, allocating risks between traditional markets and other types of cover (specialised mutual insurance funds, transfers to the financial markets, etc.), individual and Group excesses (in general, only major risks are transferred), optimising intermediation costs. Implementation methods Since 2004, the Audit Committee is presented with an annual update on the costs of covering EDF’s risks through insurance or by transferring risks to the financial markets. Since 2011, a Strategic Insurance Policy Committee (“COSA”), currently chaired by the Finance and Investments Director, provides an opportunity for the business lines and financial stakeholders to reflect on changes to and procedures for implementing the insurance policy, in particular the main characteristics of insurable risks hedging programmes. Each year, the Insurance Division carries out an analysis of the risk mapping at the Group level in order to identify solutions, even partial solutions, to cover these risks. Based on this shared view, EDF is in a position to improve, and, where necessary, extend the coverage of insurable risks in accordance with the principles established by the Group in this area. EDF has set up its Group insurance programmes and extended them broadly to its controlled subsidiaries, in order to, firstly, harmonise risk cover and rationalise its management and, secondly, control the corresponding insurance costs. The French Energy Code has gradually caused RTE to transfer to the insurance market the covers provided under the EDF group’s insurance programmes. RTE completely withdrew from the EDF group insurance programmes as at 31 March 2015. Insurance contracts, according to market practice, include exclusions, limits and sub-limits. Like all major French and foreign groups, EDF uses captive insurance companies and mutual insurance funds to supplement coverage provided by the traditional insurance markets. The EDF captive insurance companies are: Wagram Insurance Company DAC, an insurance company founded in 2003 in ■ Dublin, which is involved in the majority of the Group’s insurance programmes; Océane Re, a reinsurance company established in 2003 in Luxembourg, to ■ reinsure EDF’s nuclear civil liability. EDF is a member of the Oil Insurance Limited (OIL) mutual insurance fund, which covers the risk of damage (other than to aerial networks) to the Group’s own property or property managed under concession (by EDF and its consolidated subsidiaries). OIL is an insurance mutual fund dedicated to the needs of businesses in the energy sector and provides its members with cover for property damage. The scope covered includes inter alia nuclear power plants (the conventional portion), fossil fuel-fired power plants, hydropower facilities, network substations and exploration and production assets. The Group’s damage insurance programmes combine this cover provided by OIL and covers provided by market insurers. EDF is also a member of the European Liability Insurance for the Nuclear Industry (ELINI), the European Mutual Association for Nuclear Insurance (EMANI), the Nuclear Industry Reinsurance Association (NIRA) and Blue Re, which are mutual insurance funds that manage cover in this area for European nuclear power operators. The captive and mutual insurance companies enable EDF to reduce the cost of its insurance schemes and the total sum of premiums paid. USE OF CAPTIVE INSURANCE COMPANIES AND MUTUAL INSURANCE FUNDS 2.5.2

EDF holds general civil liability insurance covering EDF, Enedis and their controlled subsidiaries against the financial consequences of civil liability (not including nuclear damage) that they may incur in doing business as a result of damage caused to third parties. In particular, this programme covers the risks of civil liability associated with the operation of structures (hydroelectric dams, fossil fuel-fired power plants, substations and other network facilities), risks associated with development of the Group’s renewable energy activities (wind, solar, etc.), as well as risks associated with environmental damage (emissions of solid, liquid or gaseous substances). This cover is purchased to the extent of available capacity under acceptable financial terms on the insurance and reinsurance markets. Maximum cover is €1 billion. For this programme, the share of risk retained by the Group with regard to an insurable accident (“retention”), including the share of Wagram Insurance company DAC, does not exceed €5 million per insurable accident. Subsidiaries generally opt for lower deductibles that are more in line with their financial capacity.

2.

2.5.4

CIVIL LIABILITY INSURANCE FOR CORPORATE OFFICERS AND DIRECTORS

EDF holds civil liability insurance covering corporate officers and directors of EDF, Enedis and their controlled subsidiaries against the financial consequences of their civil liability incurred in performing their management functions.

2.5.5

DAMAGE INSURANCE

(NOT INCLUDING NUCLEAR ASSETS)

Conventional damage programme 2.5.5.1 The scope of the conventional damage programme includes almost all subsidiaries of EDF, notably Enedis, EDF Energy, Edison and Dalkia. Wagram Insurance Company DAC, the Group’s captive insurance company, together with other insurers and reinsurers, provide extensions of cover (property damage and business interruption) in addition to the covers provided by OIL, bringing the maximum up to €1 billion. For this conventional damage programme, the Group’s retention per claim, including the deductible (which varies by subsidiary) and the share of the risk retained by Wagram Insurance Company DAC, does not exceed €15 million. This programme provides cover for business interruption for most subsidiaries in the event of property damage, but not for EDF, which does not benefit from this cover. The actions and measures taken to prevent industrial and environmental risks and limit their impact are described in section 2.2.2 “Group risk management and control”. RTE has taken out specific property damage insurance for its own assets. Cover for “construction” risks 2.5.5.2 EDF has taken out insurance policies covering specific construction risks (construction all-risk and erection/testing all-risk policies). These policies are not included in any Group programme but are purchased on an ad hoc basis for major construction projects, such as the Flamanville EPR and Hinkley Point C, the construction of combined cycle power plants, dams, etc. These covers are specifically monitored and are renegotiated if unforeseen events occur during the construction projects.

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EDF I Reference Document 2017