New board member adds to AMRAE’s global programme expertise

Frédéric Dhers, the Insurance Director at Veolia Environment, organises the provision of coverages for over 300,000 staff spread around thousands of business sites around the world. This is not an easy task in any line of activity, and certainly a tricky one in the areas where Veolia operates, which range from energy services to waste treatment.

“We insure more than 8,500 facilities around the world,” Mr Dhers told Commercial Risk Europe in an exclusive interview from Paris. “The management of our global programmes is truly a full time activity.”

Perhaps surprisingly for many risk managers who find it hard to obtain from the insurance market everything they need to meet their global insurance needs, Mr Dhers says he is actually happy with what he currently obtains.

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Veolia’s global programmes work well at the moment, he notes, mainly because his team, and risk managers at local units, work hard to come up with all the coverages required for such a large operation.

“We have implemented robust global programmes in areas like property, casualty and D&O,” Mr Dhers pointed out. “But local and specific activities need to be properly insured at the local level.”

The provision of successful international insurance arrangements are one of the foundations of Veolia’s insurance strategy, which aims to encompass all the group’s businesses and to provide adequate protection to all its subsidiaries.

That means that the particularities of the heterogeneous industries in which Veolia operates need to be taken into account.

The company is mostly a provider of public services abd used to be the monopoly supplier to government bodies. As a result, exposures are manifold, and claims are common events.

“At Veolia, due to the very operational and international nature of our risks, we consider insurance as a true business process. As such, the procurement of insurance is under top management scrutiny,” Mr Dhers said.

It is not difficult to see why. The company manages water and energy services, which require plenty of property damage coverage. The environment is an important factor for these activities too. And it is even more important for another major speciality of Veolia–the management of waste in developed markets. The group also operates public transportation systems in Europe and the US, so the risk of liability claims is high throughout the group.

The global third party liability insurance programme is therefore one of the pillars of Veolia’s insurance policy. It encompasses a general policy for worldwide activities outside the US and Canada, with an initial coverage of up to €100m per claim a year, according to the firm’s 2010 report.

The general policy is complemented by several separate contracts for the two North American markets that cover up to U$50m per claim. This includes environmental damage sustained by third parties, and coverage for terrorist acts.

Another pillar of the insurance policy is the property damage and business interruption programme, with a group wide limit per event of €300m.

Given the scale of the coverage that Veolia Environment needs, it is not surprising that the company also invests in self-insurance solutions. It has set up a captive that enables the group to retain liability losses of up to €1.5m and €2.5m for property damage.

In order to put everything in place, Mr Dhers’ team works with a range of risk managers based in local subsidiaries who can dedicate themselves either full-time or part-time to the task, depending on the size of the unit and the country in which it operates.

But help from the insurance market is essential. “For our global programmes, we need partners that are present in all the countries where we operate. In addition to solvent insurers, we also need to benefit from the best insurance network,” Mr Dhers said.

“They also need to be prepared to work with our captives, as we retain the frequency of our losses. That means they need to have a very fluid and efficient administrative process,” he continued.

Veolia’s major global programme partner is AXA. The fact that AXA is also based in France is helpful for the company to coordinate global programmes, he said.

Insurance intermediaries have a part to play in Veolia’s global programmes too. Mr Dhers said that the group includes many companies, some of which are quite small, and so it is not possible to maintain full-time in-house experts to deal with the specific risks of each of them. “We need brokers because we require comprehensive and complex coverages for our global programmes. And we expect that brokers provide us with a clear view of what is available in the market.”

As a result, Veolia usually works with the large global brokerage companies. He expects both brokers and insurers to focus on the things that the company really needs to maintain its operations. “Don’t try to sell me the moon,” he says. “Just give me what I need.”

That would include plenty of information, and possibly more than Veolia receives today from its insurance partners. “For me it is essential to have clear and relevant information on hundreds of risk-related data that come from over 70 countries and more than 2,500 legal entities every year,” he explained.

Mr Dhers heads the department responsible for dealing with insurable risks, and he answers to the general-secretary of the company, who works as the ‘right arm’ of the chairman.

Non-insurable risks fall under the wing of the Global Risk Management department, which also reports to the secretary-general. Other top management entities also have a say on risk management strategies, such as the sustainability department that tackles environmental risks from a strategic perspective.

Mr Dhers has worked in insurance and risk management for over 20 years. He joined Veolia in 2006, after working as a vice-president of risk and insurance at Thales, the defence and aerospace group, and as a senior underwriter for markets like North America and North Asia at Scor, the French reinsurance group.

He says he is very happy to join AMRAE’s board, as it creates an opportunity to share views with a group of experienced and knowledgeable risk professionals. What looks certain is that there will not be a lack of challenges for Mr Dhers to discuss in the near future–starting with those ever more important global programmes.