“Business leaders are deeply concerned about climate change and often lack objective, actionable data to help them protect the value they have created. Our climate resilience solutions provide customers with the information they need to protect their assets from climate risks, now and in the future. In 2022 and 2023, our customers implemented more than 3,000 climate risk recommendations, reducing potential climate risk losses by $33bn and strengthening their business resilience.”
The sentence, taken from FM Global’s 2023 sustainability report, says it all about the strategy of the insurer, which after setting up its first two research centres in the United States, has added one in Singapore and one at 5 Rue Robert Stumper in Luxembourg City. Anticipating risks is what enables people to take action reduce the impact of those risks, which, of course, is good business for any insurer.
“FM’s Science and Technology Centre in Europe strengthens FM’s presence in Luxembourg,” says the press release, issued to mark the laying of the foundation stone of the new centre, “where the group’s European headquarters have been located since 2017. Luxembourg is a key strategic location for FM, thanks to its central geographical position in Europe and its access to customers and talent in several neighbouring countries, including France and Germany. The new Science and Technology Centre will focus on cutting-edge research in the areas of climate hazards, industrial technologies and cyber risk loss prevention solutions. In addition, the facility will create a collaborative environment for FM customers, prospects, colleagues and partners to train and learn through experiential laboratories. This project is a perfect example of FM’s unique engineering-based approach to risk reduction and loss prevention through scientific research--a key element in building customer resilience now and in the future.”
This centre “represents a major milestone in FM’s development as we strengthen our support and resources for our EMEA customers and introduce new research capabilities in a key market,” says FM president and CEO Malcolm Roberts. “We are proud to increase our presence in Luxembourg and the wider EMEA region. As FM continues to grow globally, we are adapting and integrating local standards, practices and knowledge into our platform. This inclusivity not only enriches our understanding, but also strengthens our relationships with our policyholders, partners and communities around the world.”
Prime minister Luc Frieden (CSV) stresses the importance of research and development “in ensuring economic prosperity.” He continues: “the FM Science and Technology Centre demonstrates the excellence of Luxembourg’s ecosystem for data-driven innovation in Europe.”
The agreement was first announced in November 2022 during a Luxembourg visit to Boston, when economy minister Franz Fayot (LSAP) signed a joint declaration of intent with Kevin Ingram, senior executive vice president and CFO of FM Global, outlining potential areas of R&D cooperation between FM Global and Luxembourg following the signing of the protocol with List.
The US mutual insurer, founded in 1835, has always operated on the principle that most claims are predictable and preventable: Zachariah Allen, the owner of a textile mill in Rhode Island, made improvements to his mill to reduce the risk of fire and increase its resistance to bad weather; but when his insurance company refused to reduce his premium, he joined forces with other mill owners to create a property insurance mutual, Factory Mutuals, responsible for insuring “good risk” mills and offering incentives to policyholders by returning their remaining premiums when their policy expired. In the 1980s, 42 mutuals merged into three companies, which in turn merged in 1999 to form the modern FM Global. Today, FM Global is a commercial property insurer with an international presence and a customer base that includes around a quarter of the Fortune 50.
FM Global’s financial results have been very strong in recent years, reflecting its underwriting efficiency and the low claims experience of its customer base. In 2022, global premium volume reached $8.8bn, up 12% year-on-year. The trend continued in 2023, with FM Global approaching $11bn in annual premiums. The combined ratio (expenses as a proportion of premiums) reached an exceptional level of around 67% in 2023, reflecting technical profitability well above the market average, a performance reflected in pre-tax profits of around $2.1bn in 2023.
The company opened its first research centre in Rhode Island in 2023, followed by another in Massachusetts and a third in Singapore. A new research centre is due to be added to the Norwood centre (in Massachusetts) in 2026. In its historic centre, four laboratories focus on fire technology, natural hazards, electrical hazards and hydraulics, and conduct experiments to help better understand these risks. The fire technology laboratory, for example, enables researchers to study the causes of structural failure, the speed at which fires spread and sprinkler protection systems. The natural hazards laboratory can simulate hurricane-force winds and hailstorms, the impacts of earthquakes and even the effects of the sun’s UV rays on building materials. Researchers in the electrical hazards laboratory test equipment to see if it ignites dust or other types of gas, either in normal operation or in the event of a malfunction. Finally, the hydraulics laboratory reproduces companies’ fire protection systems to ensure that they are installed and function correctly.
This article in French.