3.4.4 RISK FINANCING – INSURANCE
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 comprehensive policies (subject to named
exclusions) covering property, business interruption and liability risks.
In accordance with the Group’s insurance strategy, 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
As the coverage for owned properties is separate from that for
franchised and managed hotels, the maximum coverage that the
Group needs to take out is €150 million per policy for property claims.
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 for countries where local coverage is not mandatory and
where it is possible to do so under local legislation. This coverage
is renewed each year.
All frequent property and liability risks covered by the Group’s global
insurance program are self-insured through a fully owned reinsurance
company, with all units sharing the related costs.The least frequent
but more severe risks are reinsured in the global market in order to
limit the Group’s commitments and avoid exhausting the capacity
of the reinsurance subsidiary.
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 capacity, 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 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.
Registration Document 2014