Danone // 2020 Universal Registration Document

2 Overview of activities, risk factors 2.8 Insurance and risk coverage DANONE UNIVERSAL REGISTRATION DOCUMENT 2020 37 2.8 INSURANCE AND RISK COVERAGE Concerning risks other than financialmarket risksDanone has a global insurance coverage policy that is based on stringent underwriting assessments and uses insurance products fromworldwidemarkets, depending on availability and local regulations. This risk coverage is therefore consistent for all companies over which Danone has operational control. Insurance programs for property damage, business interruption and commercial general liability risk are negotiated at Company level for all subsidiaries, with leading international insurers. The “all risks except” policies are based on the broadest guarantees available on the market, coupled with deductibles of varying amounts, which are relatively low compared to those extended to groups of comparable size to reflect the autonomous management of the subsidiaries. The guarantee limits are set on the basis of worst-case scenarios and on insurance market availability. These programs were renewed on January 1, 2019 for a term of three years; the total cost of these programs remained stable at €33 million in 2020. Insurance programs for “traditional” risks, which require local management, such as coverage of vehicle fleets, guarantees for the transportation of merchandise, work-related accidents (in countries in which these accidents are covered by private insu- rance), and insurance specific to some countries, are negotiated and managed in accordance with local practices and regulations, within the framework of precise directives provided and controlled by the Group. Total premiums came to approximately €18 million in 2020. Lastly, insurance programs for potentially significant special risks, which require centralized management, such as the liability of the Company’s corporate officers, fraudulent acts, and assorted risks (product recalls, credit risk, environmental risk, etc.) are negotiated according tomarket availability, on the basis of scenarios estimating the probable impact of any claims. An insurance for risks related to cybersecurity has been subscribed as of January 1, 2020. The total cost of this category of coverage amounted to approximately €4 million in 2020. In addition, in order to optimize its insurance costs and properly control its risks, Danone has a self-insurance policy through its captive reinsurance subsidiary Danone Ré (a fully consolidated entity). The self-insurance policy applies to specific risks where the costs can be accurately estimated, as Danone is aware of their frequency and financial impact. This concerns essentially (i) coverage of property damage, business interruption and commercial general liability for a large majority of Danone’s companies (these self-in- surance programs are limited to frequent claims with a maximum of €5 million per claim) as well as transportation in some cases; and (ii) for the French subsidiaries, payments for death, long-term disability, and education. Moreover, stop-loss insurance protects Danone Ré against any increased frequency of claims. These self-insurance programs are managed by professional insurers under Danone’s supervision and the provisions are determined by independent actuaries.