Saint Gobain - Registration document 2016

7 RISKS AND CONTROL 1. Risk factors

captive insurance company, which purchases reinsurance Claims up to this amount are self-insured through the Group’s rates. coverage against increases in frequency and/or severity

The captive insurance company set up to cover property risks Group. was highly successful and delivered real benefits for the Companies acquired during the year have been integrated into existing insurance programs.

1.5.2

Liability insurance

1.5.1

Property and business interruption

for the lower tranches of coverage. legally held liable. This program comprises several programs and property damage claims for which the Group would be A program provides coverage for third-party personal injury limit of €100 million. Subsidiaries situated in the geographical The first program covers all subsidiaries and has a coverage deductible of USD 50 million. The program’s exclusions are territory of the United States and Canada Delegation have a consistent with market practice and concern in particular potentially carcinogenic substances and gradual pollution. In order to satisfy local regulatory requirements, a policy is presence. Local policies are backed up by the master policy taken out in each country in which the Group has a significant proves inadequate. issued in Paris, which can be activated when local coverage geographic area covered by the United States and Canada The second program covers subsidiaries located in the program is structured differently to deal with the specific Delegation and has a coverage limit of USD 50 million. This nature of liability risks in the United States. It is divided into on the London insurance market. Exclusions are in line with several lines of coverage, requiring it to be placed, if needed, concern contractual liability, pollution and third-party current market practice in the United States and primarily In addition to the two programs described above, a number bring the total coverage limit to a level considered of supplementary programs have been set up in order to compatible with the Group’s businesses. of liability risks, and the units are motivated to control costs Within the operating units, action is taken to raise awareness self-insurance. The Group also runs a risk prevention program by assuming a deductible that does not, however, constitute Health and Safety Department. at its operating units with the support of the Environment, Exceptions 1.5.3 Joint ventures and companies not controlled by the Group separate insurance coverage. are excluded from the above programs and purchase consequential loss.

insurance

insured by a local program. These local insurance programs program. It does not cover operations in Brazil, which are come under the Risk and Insurance Department’s supervision. The Group’s non-excluded property and casualty risks and insured assets are covered by a worldwide insurance business interruption risks arising from accidental damage to Department, specifically: The programs meet the insurance criteria laid down by the all policies are “all risks” policies with named exclusions; ‹ claims limits of liability are based on worst-case scenarios ‹ where safety systems operate effectively; deductibles are proportionate to the size of the site ‹ concerned and cannot be qualified as self-insurance. their impact on operations, and cover natural disasters like which exclude certain risks, such as computer viruses and These criteria take into account current insurance offerings, amount. floods, storms, earthquakes or tsunamis only up to a certain In extreme scenarios, such events could have a substantial costs and lost production costs. uninsured financial impact in terms of both reconstruction findings of the annual audits carried out by independent The Risks and Insurance Department’s policy is based on the audits give a clear picture of the risk exposure of the main prevention experts recognized by the Group’s insurers. These sites in the event of a fire or other incident, and provide an scenario. estimate of the financial consequences in a worst-case the insurance market for all Group subsidiaries, excluding Individual claims in excess of €12.5 million are transferred to Brazil.

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SAINT-GOBAIN - REGISTRATION DOCUMENT 2016

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