2 _65 2023 UNIVERSAL REGISTRATION DOCUMENT_MICHELIN 2 RISK MANAGEMENT Cross-functional risk management procedures 2.2.5 Insurance coverage Some risks can be transferred to insurance companies in line with the Group's insurance strategy, with different solutions used depending on the frequency of the risks concerned. To cover high-frequency risks, integrated global insurance programs have been arranged, to the extent possible, in the insurance and reinsurance markets. These mainly concern property & casualty/business interruption, liability, accidental pollution and cyber risk insurance: ● the property & casualty/business interruption insurance program provides combined total coverage of €1.5 billion, except for machinery insurance (€750 million) and natural disaster insurance, for which the coverage limit may be lower depending on the country; ● the liability insurance program comprises three key coverage areas: ● product liability for the manufacturing companies, ● service liability for the marketing and services companies, ● general business liability, offering direct coverage in European Union countries and countries where the Group operates manufacturing facilities, and umbrella coverage in excess of local cover in all other countries; ● a pollution program provides environmental liability coverage; ● a cyber risk insurance program covers damages (including additional operating costs) as well as damages to third parties, with a combined limit of €120 million per year. These programs cover all Group subsidiaries. The joint ventures are covered by separate insurance programs that are independent from those of the two shareholders. For companies in which the Group has a non-controlling interest, the majority shareholder is responsible for purchasing appropriate insurance cover. For joint ventures and non‑controlling interests, the safeguard clauses included in the Group's insurance programs protect its interests up to the amount of its investment. To control insurance policy management and reduce costs by pooling medium-frequency risks, the Group has set up a wholly‑owned captive insurance and reinsurance company to provide coverage primarily in the following areas, with limits commensurate with its resources: ● property & casualty risks, with a €50 million limit per claim; ● product liability in the United States and Canada, with limits of USD 20 million per claim and USD 40 million per year; ● product recall expenses, with limits of USD 20 million per claim and USD 40 million per year; ● cyber security risks. ● Total premiums paid to external insurance companies in 2023 amounted to €51.7 million, up 2.8% from 2022. While moderate, the increase reflected the persistently tight pricing environment in certain lines (mainly liability) and the highly selective allocation of capacity by insurers. Note that the Michelin Group is one of the founding members of a mutual insurance company dedicated to covering cyber risks.
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