Registration Document 2005 - Total.com

Insurance and risk management
Organization
TOTAL has its own insurance and reinsurance company, Omnium
Insurance and Reinsurance Company (OIRC). OIRC is totally
integrated into the Group’s insurance management and acts
as a centralized global operations tool for covering the Group’s
risks. It allows the Group to implement its insurance program,
notwithstanding the varying regulatory environments in the range of
countries where the Group is present.
Certain countries require the purchase of insurance from a local
insurance company. When a subsidiary company of the Group
is subject to these constraints and is able to obtain insurance
from a local company meeting Group standards, OIRC attempts
to obtain a retrocession of the covered risks. As a result, OIRC
negotiates reinsurance contracts with the subsidiaries’ local
insurance companies, which transfer almost all of the risk (between
97.5% and 100%) to OIRC. When a local insurer covers the risks
at a lower level than that defined by the Group, OIRC provides
additional coverage in an attempt to standardize coverage Groupwide.
On the other hand, certain countries require insurance in
excess of what the Group may deem necessary under Group-wide
standards. In these cases, OIRC also provides the additional
coverage necessary to satisfy these legal obligations and the Group
does not need to turn to an outside insurer.
At the same time, OIRC negotiates a global reinsurance program
with mutual insurance companies for the oil industry and
commercial reinsurers. OIRC permits the Group to manage price
variations in the insurance market, by taking on a greater or lesser
amount of risk corresponding to the price trends in the insurance
market.
In 2005, the part of incident kept by OIRC after reinsurance
was $27.5 million per incident “property damage and loss of
operations”.
Risk factors
Insurance and risk management
Risk and insurance management policy
TOTAL - Registration Document 2005
4
In this context, the Group risk and insurance management policy is
to work with the relevant internal department of each subsidiary to:
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•
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define scenarios of major disaster risks by analyzing those events
whose consequences would be the most significant for third
parties, for employees and for the Group;
assess the potential financial impact on the Group in case these
disasters occur;
implement measures to limit the possibility such events occur and
the scope of damage in case of their occurrence; and
•
manage the level of risk from such events that is covered
internally by the Group and that which is transferred to the
insurance market.
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