A N N U A L R E P O R T - Bouygues

RISKS
takes out its own insurance policies.
Premiums also vary considerably; the
Group’s premium payments to general
insurance companies represent
approximately 0.3% of sales, a percentage
which can be understood only
in the light of that diversity.
In addition to mandatory insurance,
covering 10-year building guarantees
in France and automobile third party
liability for example, the main policies
are as follows.
• Damage. The cover is generally
equal to the value of the assets
insured. For the largest concentrations
of value, however, the cover
is limited to the amount of repairs
for damage occurring in a disaster
scenario, defined with the insurers’
consent following prior expert
valuations carried out by external
consultants.
When damage to the insured assets
is likely to cause an interruption in
operations, insurance is taken out to
cover the resulting operating losses.
The cover is based on the length of
time for which the damaged site is
unavailable according to the disaster
scenario used and existing disaster
recovery plans.
• Site insurance. The cover is equal
to the market value. By way of an
exception, for certain geographically
extended projects, the cover
may also be limited to the amount
of repairs for damage occurring in
a disaster scenario. The scenario is
determined according to the type
of project (eg, motorway, viaduct or
tunnel) and the part of the world in
which it is situated, so as to assess
the risk of earthquakes or cyclones,
for example, and the resulting
damage. The cover is sometimes
limited by the total available capacity
on the world insurance market,
for example for damage resulting
from earthquakes or terrorist acts
in another country.
• Liability insurance. These policies
insure against damage to third
parties for which Group companies
may be responsible. As these companies
are of very different size and
operate in very different businesses,
the cover is tailored to the risks
incurred. It is generally in excess of
€5 million per claim.
For all these policies, deductibles are
adjusted to optimise the overall cost to
the Group according to the likelihood
of claims and the premium reductions
that can be obtained from insurers by
increasing deductibles. Taking these
factors into account, certain risks are
insured without any deductible at all
while others are insured with a higher
deductible, amounting in some cases
to as much as €3 million.
Some insurance policies issued by
traditional blue-chip insurance companies
are partly reinsured by the
Group’s captive reinsurance subsidiary.
The subsidiary is managed by
a specialist company which defines
the provisions to be constituted in
compliance with insurance and reinsurance
regulations, the purpose of
which is to ensure that the provisions
are sufficient to meet the commitments
of the companies to which they
apply.
The Group and its subsidiaries continue
to take preventive measures
and introduce safeguards to further
reduce the likelihood of accidents and
losses and to limit their scope. One
benefit of this policy is to facilitate
negotiations with insurers over conditions
of coverage and the amount
of premiums.
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