Registration Document 2005 - Total.com

4
Risk factors
Insurance and risk management
Insurance policy
The Group has worldwide tort and property insurance coverage for
all its subsidiaries.
These programs are contracted with first-class insurers (or
reinsurers and mutual insurance companies of the oil industry
through OIRC).
The amounts insured depend on the financial risks defined in the
disaster scenarios discussed above and the coverage terms offered
by the market (available capacities and price conditions).
More specifically, for:
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•
Tort liability: since the maximum financial risk cannot be evaluated
using a systemic approach, the amounts insured are based
on market conditions and industry practice, in particular, the oil
industry. The insurance cap in 2005 for general tort and product
liability was $840 million.
Property: the amounts insured by sector and by site are based
on estimated costs and reconstruction scenarios under the
identified worst-case disaster scenarios and on insurance market
conditions.
For example, for the highest estimated risk of the Group (the Alwyn
field in the UK), the insurance cap was $1.1 billion in 2005.
90 TOTAL - Registration Document 2005
Coverage of loss of operations was provided in 2005 for the
Refining and Chemicals sectors for a compensation period of
3 years (Refining) or 2 years (Chemicals), also based on the
identified worst-case disaster scenarios and on insurance market
conditions (combined limits for property and loss of operations).
Moreover, deductibles for material damages fluctuate between $0.1
and $5 million euros depending on the level of risk, and are carried
by the subsidiary.
As a result of less favorable insurance terms available on the market
on January 1, 2006, the Group has reduced its coverage for civil
liability to $735 million, increased the amount of property insurance
retained by its reinsurance captive to $50 million and terminated its
coverage for loss of operations.
The policy described above is given as an example of past
practice over a certain period of time and cannot be considered to
represent future conditions. The Group’s insurance policy may be
changed at any time depending on the market conditions, specific
circumstances and on management’s assessment of risks and the
adequacy of their coverage. The Group cannot guarantee that it will
not suffer any uninsured loss.