Registration document 2007 - Total.com

Insurance and risk management
Organization
TOTAL has its own insurance and reinsurance company, Omnium
Insurance and Reinsurance Company (OIRC). OIRC is totally
integrated into the Group’s insurance management and acts as a
centralized global operations tool for covering the Group’s risks. It
allows the Group to implement its insurance program,
notwithstanding the varying regulatory environments in the range
of countries where the Group is present.
Certain countries require the purchase of insurance from a local
insurance company. When a subsidiary company of the Group is
subject to these constraints and is able to obtain insurance from
a local company meeting Group standards, OIRC attempts to
obtain a retrocession of the covered risks. As a result, OIRC
negotiates reinsurance contracts with the subsidiaries’ local
insurance companies, which transfer almost all of the risk
(between 97.5% and 100%) to OIRC. When a local insurer
covers the risks at a lower level than that defined by the Group,
OIRC provides additional coverage in an attempt to standardize
coverage Group-wide. On the other hand, certain countries
require insurance in excess of what the Group may deem
necessary under Group-wide standards. In these cases, OIRC
also provides the additional coverage necessary to satisfy these
legal obligations and the Group does not need to turn to an
outside insurer.
At the same time, OIRC negotiates a reinsurance program at the
Group level with mutual insurance companies for the oil industry
and commercial reinsurers. OIRC permits the Group to manage
price variations in the insurance market, by taking on a greater or
lesser amount of risk corresponding to the price trends in the
insurance market.
In 2006, the amount of risk retained by OIRC after reinsurance
was $50 million per property insurance incident.
Risk Factors
Insurance and risk management
Risk and insurance management policy
In this context, the Group risk and insurance management policy
is to work with the relevant internal department of each
subsidiary to:
• define scenarios of major disaster risks by analyzing those
events whose consequences would be the most significant for
third parties, for employees and for the Group;
• assess the potential financial impact on the Group in case
these disasters occur;
• implement measures to limit the possibility such events occur
and the scope of damage in case of their occurrence; and
• manage the level of risk from such events that is covered
internally by the Group and that which is transferred to the
insurance market.
4
TOTAL – Registration Document 2006 89