Thomas A. Lawson, FM Global's new president and CEO, has been with the company for 35 years—an unusual accomplishment in today's business climate. He graduated from Illinois State University (Normal, Ill.) with a degree in occupational safety, a good fit for an insurance company focused on understanding the science of risk and creating solutions based on engineering and research.
FM Global's goal is to provide stability and consistency to clients and help them maintain “resiliency,” a recurring theme for the company. The company uses science, research and engineering to help clients assess and mitigate their risks. This approach, Lawson believes, helps companies rebound from losses more quickly.
In a personal interview, Lawson told NU that “It's quite an honor to be the CEO of a company that has had a successful business model for 180 years.” He doesn't plan to change the basic model, but the company will continue to adapt and be proactive to meet changing conditions. The company is looking extensively at predictive analytics and making better use of the data it has available.
Most significant issues for 2015
Lawson said that the most significant issue across the board is cyber. “Clients are more aware of the ways they are at risk. As technology evolves, clients understand that they have more exposure,” he added. FM Global started to cover cyber in early 2000, but, Lawson said, there is still more opportunity here.
Terrorism in all its forms also is a major risk for 2015 and beyond. FM Global supported reauthorization of the Terrorism Risk Insurance Act (TRIA) as the best solution for clients in terms of limits and coverage. It also eliminates much of the uncertainty caused by varying state regulations.
When asked about risk management challenges, Lawson said, “A company has to decide for itself how to approach risk management. It's a competitive advantage to understand what you're up against and tailor solutions, then implement them. So when bad things happen, you're the one left standing.”
Looking for a few good engineers
In keeping with company tradition, “We hire 100 to 150 engineers per year. We have approximately 5,500 employees. Of that number 1,800 are practicing engineers and 1,800 are former engineers,” Lawson said. He also stressed the importance of hiring good business people who understand the risks a client faces and can create solutions based on detailed analysis of those risks.
FM Global engineers create 1,500 data points for every client location they visit. The data gives the underwriters—also trained engineers—a better picture of the individual client and conditions at each location. The data analysis also helps clients make better decisions about their risk management priorities.
In an industry that is struggling to attract new talent, FM Global has been successful at hiring. According to Lawson, this success goes to the distinction of who they are as a company. They give their new employee-engineers an opportunity to explore career options, from consulting to sales. “You don't have to be an engineer if you don't want to,” he explained. New employees see a variety of industries and locations when visiting client sites, for example, a manufacturing plant one day and a winery and bottling plant the next.
The company has its own adjusters and claims processors, most of whom also are former or practicing engineers. Unlike many adjusters brought in from other locations to help with major catastrophes, FM Global's adjusters know what's normal in an industry and location because of the company's research and their own work with clients, Lawson explained, which leads to a 95% customer retention rate. He acknowledged that the market is competitive and customers do shop around, but ultimately most of them stay with FM Global.
Sharing with clients
Clients also share the benefits of good loss experience by getting credit against premium in very good years, Lawson said. Since 1999, FM Global has given premium credit seven times for a total of $2.5 billion. “This is a testament to our clients who work hard to mitigate their risk and thus their losses,” he explained.
Looking toward the future, Lawson observed there are always new exposures and new hazards, but that gives FM Global the opportunity to develop new solutions. The company will continue to rely on scientific, research-based loss prevention techniques, and a stable product to meet future challenges, however. “Our goal is to answer clients' questions before they ask,” he said.
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