Why FM Global is on fire when it comes to risk management

Why FM Global is on fire when it comes to risk management | Insurance Business

Why FM Global is on fire when it comes to risk management

If you wanted to do a risk assessment for fire, what would it usually consist of?

Usually an assessment of the building, any hazards, writing of a fire management assessment of overall risk, just to name a few.

FM Global, however, takes its risk assessments to the next level. It literally sets structures and huge amounts of materials on fire to assess risks, seeing exactly how they burn in real time.

The speciality insurer has built a custom research campus that includes a fire technology lab, where their experts test out different scenarios.  

Adriano Lanzilotto, vice president, client service manager of FM Global in the UK, was showing off the capabilities of the lab at the company’s Airmic stand, with some very impressive footage. The research campus is based on Rhode Island in the USA but provides data for the entire global operation. A new learning centre with some similar features and one-of-a-kind learning facilities to provide experiential loss prevention education will open soon in Singapore.

“In America we do testing on a structure like this [the conference centre],” Lanzilotto explained. “We set a fire and we see how it burns. Local regulations in the UK - they take a bit and they burn it, it’s not the same.”

The campus also has a natural hazards lab, that tests things like windstorms, floods and earthquakes, as well as an electrical hazards lab and a hydraulics lab.

“We’re quite different from the rest of the market,” he said. “We use engineering a lot more than our competitors to study the products that we insure, like fire and natural catastrophe they’re all engineered with one-to-one scale testing.”

As well as the research lab, FM Global does a lot of work with data to help clients understand weak points in their portfolios.

“We collect information using our engineers that go to see the locations that we insure,” Lanzilotto explained. “It’s about 60,000 locations per year, and the engineers collect about 700 data points from each of the locations. There’s a huge amount of data.”

FM Global is able to collate all the data into a program that can analyse and show similarities between incidents.

“In the last 10 years we have developed a huge amount of analytics tools that look at the data in each location and compare it to the data across all our portfolio - that allows us to tell which locations are more likely to have a loss in the future,” he said. 

“So, we are able to tell our clients to focus on certain locations because they are more likely to experience a loss. This is the way that we use the data to predict where the next big loss will happen.”

Ultimately, this helps their clients in unexpected ways.

“Before clients had the problem of maybe having some money to spend, but not knowing exactly where to spend it,” the vice president explained. “Now with these tools we’re helping them focus in on where it’s important.

“If they have £1 million to spend we tell them ‘you should spend it here because this is where you will most likely have a loss.’ We give them a direction that they didn’t have before. And sometimes they are surprised by the results.”

The message, in the end, Lanzilotto said, is resilience.

“The focus is resilience. It’s to help our clients be resilient when something bad happens,” he said.  “For example, a fire, a flood, could potentially bring down an organisation.

“We want our clients to be prepared, to minimise the loss if they have one, to prevent it completely. Resilience is a choice - we don’t want it to happen by chance, you need to choose to be resilient.”