The Corporate Insurance function, in close cooperation with top management, defines, on an annual basis, Saipem Group guidelines for insurance coverage against damage to property, third party liability as well as risks related to the performance of contracts.
On the basis of the guidelines, an Insurance Program is defined, which identifies specific excess and maximum coverage for each type of risk on the basis of an analysis that takes into account claim statistics of recent years, industry statistics and conditions offered by the international insurance market.
The Saipem insurance program is structured in such a way as to appropriately transfer to the insurance market, risks deriving from operations, in particular the
risks associated with the management of the fleet, equipment and other assets, including third party liability risks and risks deriving from the performance of
contracts awarded by its clients.
Given the coverage that is offered by the insurance market and the changing circumstances on the energy market in which Saipem operates, it is not possible to guarantee that all circumstances and events will be adequately covered by the insurance program. Equally, due to the volatility of the insurance market it cannot be guaranteed that it will be possible in the future to reasonably maintain adequate insurance coverage at current rates, terms and conditions.
Within the Saipem Insurance Program, a distinction can be made between insurance cover for Group assets ('Corporate insurance policies') and the insurance
cover connected with project execution ('Project execution insurance policies').
Corporate insurance policies
The Corporate insurance program is structured with an initial band of risk that is self insured through a captive reinsurance company, with amounts in excess covered by a catastrophic insurance program taken out on the insurance market.
The catastrophic insurance program is composed of policies that cover damage to property, and maritime and non maritime third party liability. Cover can be
broken down as follows.
Damage to property
- 'Fleet Insurance' policy: covers the entire fleet against events that cause partial or total damage to vessels;
- 'Equipment' policy: covers all onshore and offshore equipment, for example site equipment, onshore drilling rigs, subsea Remote Operating Vehicles (ROV), etc.;
- 'Transport' policy: covers transport, handling and storage of assets and equipment by land, sea or air;
- 'Buildings and Sites' policy: covers owned or rented buildings, offices, storage facilities and shipyards;
- 'Other minor risks' policy: covers minor risks such as theft and employee dishonesty.
- 'Protection & Indemnity' ('P&I') policy: shipowners' liability cover through a P&I Club that is part of the International Group of P&I Clubs, up to a limit of US $5.6 billion for events occurring during transit and up to US $300 million for events occurring during operations. The policy also includes a sublimit for sea surface pollution by vessels of an amount per event of up to US $1 billion during transit and up to US $300 million during operations;
- 'Comprehensive General Liability' policy: covers all other types of general and third party liability claims arising from Saipem's industrial activities and supplements the specific P&I coverage up to a limit of 300 million per event;
- 'Employer's Liability' and 'Personal Accident' policies:
cover employer liability and employee accident risks respectively on the basis of the specific regulations in force in each country where the Group operates.
A key tool in the management of Saipem's insurable risks is the captive reinsurance company Sigurd Rùck AG, set up and operational since 2008, which covers the initial band of risk, corresponding to 10 million per event for all classes of risk.
Sigurd Rùck AG in turn mitigates its portfolio of risks by issuing reinsurance-linked securities on the primary securities market.
Project execution insurance policies
For all contracts awarded, specific project insurance coverage must be taken out. Generally, the contractual responsibility for such insurance lies with the client.
Where the responsibility lies with the contractor, Saipem takes out insurance that will cover all risks connected with the project for its entire duration.
Usually it takes out 'Builders' All Risks' insurance, which covers the scope of work of the contract, i.e. damage to the works under construction, as well as to equipment, products and materials required for its construction and third party liability for all works to be performed by the Group during all phases of project execution (engineering, transportation, construction, assembly, testing), including the contractual guarantee period.
The high insurance premiums and excesses on such policies represents an incentive to Saipem in its efforts to achieve the continuous improvement of its prevention and protection processes in terms of quality, health, safety and environmental impact.