Registration Document 2013
Sensitivity to interest rates
Based on the Group’s net debt and amount of invested cash, a 50-basis point rise in interest rates would feed through to an €8 million
increase in consolidated interest income.
3.4.4. INSURANCE – RISK COVERAGE
Accor’s risks are spread across a very wide number of locations
throughout the world, which protects it to a large degree against
severe risks. Property and business interruption cover is determined
based on the Group site with the estimated maximum loss.
In the case of liability insurance, estimated maximum loss has been
benchmarked with industry practices, taking into account the fact
that hotels are sometimes located in large property complexes or
near sensitive sites such as airports or train stations.
The majority of Accor’s risks are covered
a global insurance
program that comprises all risks policies (subject to named
exclusions) covering property, business interruption and liability
risks. In accordance with Group policy, as validated by the Executive
Committee, this program is being extended wherever possible
under local laws and regulations.
As part of a move to standardize insurance coverage across the
Group’s banners, since January 1, 2011, the owners of franchised
and managed hotels can benefit from the Group program.
This program offers:
separate property and casualty coverage for Accor and the
hotel-owning subsidiaries on the one hand, and for the owners
of franchised and managed hotels on the other;
the possibility for owners of franchised and managed hotels
to benefit from some of the Group’s liability coverage, so as
to enhance the compensation paid out to guests in settlement
of their claims.
This decision to separate coverage for owned properties from that
of the franchised andmanaged hotels led to a downward adjustment
of the estimated maximum loss, thereby enabling reductions in
(i) the maximum per claim coverage to €100 million for property
claims, and (ii) the common excess policy to €150 million.
In the case of liability claims, the maximum per claim coverage
currently stands at €500 million.
Protection against natural disaster risk is a particular priority and
special terms have been negotiated on a country-by-country basis
wherever possible in the local insurance markets for owned hotels
on the one hand and for franchised and managed hotels on the
other. Similarly, specific coverage has been taken out for terrorism
risks and is renewed each year for countries where local coverage
is not mandatory.All frequent property and liability risks covered
by the Group’s global insurance program are self-insured through
a captive reinsurance company, with all units sharing the related
costs. The least frequent but more severe risks are reinsured in
the market in order to limit the Group’s commitments and avoid
depleting the captive’s funds.
Local insurance programs have been set up in certain countries,
such as Australia, New Zealand and India. In Australia and New
Zealand, heavy exposure to natural disaster risks combined with
favorable conditions in the local insurance market prompted the
Group to take out local coverage for property and casualty and
business interruption risks. In India, insurance legislation has made
local programs mandatory.
As it has not suffered any major uninsured losses, Accor deems
that its insurance coverage is adequate. The same is true for its
self-insurance system, based on the loss experience.
The Group organizes fire prevention inspections to reduce risk
exposure and obtain cover on a cost-effective basis, taking into
account conditions in the insurance and reinsurance markets.
Changes in market insurance rates are closely tracked by the Group
and, where appropriate, risks are self-insured in order to limit the
insurance costs incurred by the various businesses and to avoid
steep increases. The centralized risk management system rolled
out in 2008 has enabled tighter tracking of the loss experience,
allowing the Technical Department to take swift measures to
reduce the related risk exposure. In 2013, new functions were
added to this system, making it possible to systematically track
fire prevention measures and perform fire risk self-assessments.
Other forms of global insurance, such as for construction-related
risks and IT fraud, are also set up centrally in order to optimize
insurance costs and ensure the quality of purchased coverage.