Research Lab Helps FM Global Lead Pack

The 411 risk managers completing the survey were asked to rate carriers with which they are familiar, among the more than 50 insurers listed. FM Global ranked highest among the survey group on every factor.

FM Global insures facilities in more than 130 countries, Mr. Lawson explained, adding that the company delivers the same service and loss prevention standards "whether the client is in Chicago or Shanghai. It's really the best example of why we do what we do. Because when a client can sit there and see the smoke and feel the heat and see the roofing shingles fly off the roof, it makes it real."

He added, however, that "luckily, most people have never seen a [real] loss, which is a good thing. This [research facility] lets people see it in a controlled environment and it doesn't affect their building."

A big reason for the company's success, Mr. Lawson said, is its focus. "We don't do safety or liability or workers' comp or auto or life," he said. "We do one thing, so it forces us to do it well–because if we don't, we won't have any clients." (FM Global was ranked as the Risk Manager Choice for buyers of all sizes on commercial property and business interruption coverage.)

Unlike other carriers offering multiple lines, he added, "we can't shift from market to market. If you have a big spread, you can go to property for awhile and another coverage when that one tails off."

The company–founded 175 years ago–is a mutual, which also serves to emphasize FM Global's focus on clients, he added.

In addition, Mr. Lawson cited "the strength of our business model. We believe the majority of loss can be prevented–that loss isn't a foregone conclusion. That let's us be the leader. Not because we say so, but because our clients say so."

The company's research on loss prevention has a big impact because of its scientific basis, he said, noting that FM Global has invested more than $100 million into its state-of-the-art research campus to study loss prevention. The company employs more than 50 Ph.D.'s whose full-time mission, he noted, is to "turn that science into loss prevention solutions. We've turned loss prevention into a science, as opposed to an advisory capacity."

This philosophy allows clients to control their destiny, helping them identify and assess risks and come up with unique solutions for their facilities, he said.

The research, he noted, covers just about any aspect of loss imaginable. Because fire is still the largest cause of property loss, much of the work at FM Global deals with fire and the use of sprinklers. Another focus is natural hazards.

"When you mention building materials–we want to make sure that the roofs stay on, the windows stay up, that whatever Mother Nature throws at a building, it keeps it on the outside as opposed to getting inside," he explained.

An important aspect of their work is related to equipment hazards, such as machinery, or "anything related to property," he said, noting that science takes their research "and turns it into FM Global standards, or data sheets, that we share with our clients and the world, in general to help them focus on preventing loss."

There are always opportunities to make improvements. He noted that the research facility allows clients to test their specific materials and storage arrangements.

A good example, Mr. Lawson said, might be manufactured stuffed animals being stored in a warehouse. "You wouldn't think a stuffed animal is a dangerous product, but it's typically full of flammables, and the thing that makes them soft and sellable is what potentially could make them burn," he explained.

Another example would be an aerosol can, containing flammable propellant. "We want to have the event happen in our laboratory so that it doesn't happen at a client's facility," he said.

This type of testing, he noted, is another difference-maker. "Very few places in the world do that, at least to the depth that we do," he said, adding that "one of the benefits of membership [with FM Global] is that you get specific customized solutions to your specific issue."

Given the volatility in the current economy, Mr. Lawson said one of the company's most important offerings to risk managers is stability.

FM Global has high marks with ratings agencies and maintains its "A-plus" (Superior) financial strength rating and "stable" rating outlook from A.M. Best.

The recently released "A-plus" rating affirmation, A.M. Best said this month, is assigned to those insurers with "a very strong ability to meet their ongoing obligations to policyholders."

The rating reflects FM Global's "very strong capitalization, solid operating performance, benefits from the company's loss prevention technology and property conservation, and market leadership position in the commercial property market," acknowledged A.M. Best.

The agency added that its outlook reflects Best's view that FM Global's "capitalization will remain more than supportive of the current rating, growing through strong earnings and its leadership position in providing property coverages worldwide."