2010Annual Report - Schneider Electric CZ, s.r.o.
2010Annual Report - Schneider Electric CZ, s.r.o.
2010Annual Report - Schneider Electric CZ, s.r.o.
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Insurance<br />
<strong>Schneider</strong> <strong>Electric</strong>’s strategy for managing insurable risks is<br />
designed to defend the interests of employees and customers and<br />
to protect the Company’s assets, the environment, employees,<br />
customers and its shareholders’ investment.<br />
This strategy entails:<br />
• identifying and quantifying the main areas of risk;<br />
• preventing risks and protecting industrial equipment; having<br />
audits carried out at the main sites by an independent company,<br />
launching a self-evaluation campaign for fi re risk for all of the<br />
Group’s plants and distribution centres;<br />
• organising and deploying business continuity plans and crisis<br />
management resources, notably for health risks such as<br />
pandemics, technical and political risks and natural disasters;<br />
• carrying out hazard and vulnerability studies and safety<br />
management for people and equipment;<br />
• maintaining the necessary insurance cover for the main risks<br />
facing Group companies under global programs. The Group<br />
carefully screens insurance and reinsurance companies and<br />
evaluates their solvency.<br />
In addition, the Group has taken out specifi c cover in response to<br />
certain local conditions, regulations or the requirements of certain<br />
risks, projects and businesses. To extend guarantees and reduce<br />
budgets, the Group coordinates purchasing of local cover.<br />
Liability insurance<br />
The integrated global liability insurance program set up in 2007<br />
was renewed on January 1, 2011. This “all risks except” program<br />
represents adequate coverage of the Group’s exposure to liability<br />
claims in connection with its businesses.<br />
Certain specifi c risks, such as aeronautic or environmental risk, are<br />
covered by specifi c programs.<br />
Property damage and business interruption<br />
insurance<br />
A new global insurance program was put in place on July 1, 2010,<br />
for a term of two years. This is an “all risks except” contract which<br />
covers fi re, explosion, natural disaster, machinery breakdown and<br />
other events that could affect <strong>Schneider</strong> <strong>Electric</strong>’s property, as well<br />
DESCRIPTION OF THE GROUP, AND ITS STRATEGY, MARKETS AND BUSINESSES<br />
RISK FACTORS<br />
as operating losses caused by business interruption. Settlements<br />
under the global program are capped at EUR350 million per claim<br />
and specifi c limits apply to certain risks, such as natural disasters<br />
and machinery breakdown. These limits were determined on the<br />
basis of scenarios of loss established by specialists and available<br />
capacity in the insurance sector.<br />
Assets are insured at replacement value.<br />
Shipping and transport insurance<br />
On January 1, 2009, the Group implemented a new global shipping/<br />
transport insurance program that covers all goods shipments,<br />
including between Group facilities, by all means of transport, with<br />
a maximum insured value of EUR15.2 million per convoy. This<br />
program, which will be renewed in 2011, covers Group subsidiaries<br />
that had previously been insured under local, non-integrated<br />
contracts.<br />
Self insurance<br />
To optimise costs, <strong>Schneider</strong> <strong>Electric</strong> self insures certain frequent<br />
risks through two captive insurance companies:<br />
• outside North America, a captive reinsurance company offers<br />
property/casualty and liability coverage capped at EUR11 million<br />
per year;<br />
• in North America, a captive insurance company is used to align<br />
deductibles and self-insured retentions imposed by the insurers<br />
of automobile, liability and workers’ compensation primary layers.<br />
Self-insured retentions range from USD0.5 million to USD5 million<br />
per claim, depending on the risk. An actuary validates the<br />
provisions recorded by the captive reinsurance company each<br />
year.<br />
The cost of self-insured claims is not material at the Group level.<br />
Cost of insurance programs<br />
The cost of the Group’s main insurance programs, excluding<br />
captive reinsurance, totaled around EUR15 million in 2010.<br />
2010 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 43<br />
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