FM
Global - (en)
FM Global is a U.S. based company that specializes in property protection
and provides insurance and risk management services to some of the world's
largest corporations.
FM Global attempts to provide customers with a better understanding of
their risks in the hope that they will develop sound loss prevention
solutions that safeguard their properties and minimizes financial impact
to the customer and insurance company if a loss occurs.
FM Global bases risk improvement in engineering and research. The
foundation of this is their belief that all property losses are
preventable. The FM Global Research Campus (based in Rhode Island)
conducts testing in Fire Technology, Natural Hazards, Electrical Hazards
and Hydraulics. These tests range from witnessing the difference in how
products burn to how construction components perform in hurricane
conditions. The testing conducted at the Research Campus has helped both
clients and industries better understand their hazards for the past 35
years.
For nearly two centuries, clients have relied on FM Global for ways to
prevent, control and insure against commercial and industrial property
losses worldwide.
The Beginning
During the depression of 1835, Zachariah Allen, a prominent textile mill
owner, set out to reduce the insurance premium on his Rhode Island, USA,
mill by making property improvements that would minimize the chance of
fire loss. At that time, insurance premium increases for losses were
shared among all insureds, regardless of individual loss history.
Although widely accepted today, the concept of loss prevention and control
was virtually unheard of at the time. To Allen, a proactive approach to
preventing losses made good economic sense.
After making considerable improvements to his mill, Allen requested a
reduction in his premium, but was denied. He called upon other local
textile mill owners who shared his loss prevention philosophy to create a
mutual insurance company that would insure only "good risk"
factories. (Today, these are known as highly protected risks, or HPR
properties.) This would result in fewer losses, he reasoned, and hence,
smaller premium payments. Whatever premium remained at the end of the year
would be returned to policyholders in the form of dividends.
Ironically, current FM Global clients do not necessarily receive lower
premiums upon completion of loss prevention recommendations. Although a
mutual company, FM Global charges clients a rate comparable to private
companies.
Sold on the concept, the group agreed, and by year's end, formed the
Manufacturers Mutual Fire Insurance Company, the oldest predecessor of FM
Global.
During the company's first 14 years, the mill owners and mutual
policyholders of Manufacturers Mutual enjoyed an average 50-percent
reduction in premium compared with what other insurance companies were
charging. As Allen predicted, proper fire prevention methods, monitored by
regular fire inspections for mill policyholders, resulted in fewer losses.
Despite its initial success, one problem remained for the pioneer mutual
insurance company: A single mutual insurance company could not withstand
the financial cost of the loss of an entire plant. More capacity was
needed, so in 1848, Allen formed another mutual insurance company, Rhode
Island Mutual.
Expansion
In 1850, Boston Manufacturers Mutual Fire Insurance Company, the
third-oldest FM Global predecessor, was created when Allen convinced a
Boston merchant with significant cotton-mill ownership to form his own
mutual insurance company with like-minded Boston mill owners.
Throughout the next 20 years, other mutual insurance companies were added
to the group roster. Together, these companies and the ones that later
evolved soon became known as the Associated Factory Mutual Fire Insurance
Companies, or the Factory Mutuals, for short.
Loss information helped identify specific industry hazards and was
essential to developing loss control recommendations for policyholders in
similar industries. Such information was shared among all the Factory
Mutual (FM) insurance companies, and was particularly critical to the
inspection teams.
As the FM companies grew, however, the inspection workload became nearly
impossible to manage. By 1878, the FM companies formed a dedicated unit to
handle the collective inspection activities for all the FM policyholders.
This unique group of loss control specialists initially provided just
inspection services. The group later began performing appraisals and
adjustments, loss analysis and research activities associated with
preventing fire and other hazards in order to benefit the mutual insurance
company owners and their policyholders. Today, all of these services
remain components to FM Global in the form of engineering and research.
The FM companies' main interests in the late 1800s and early 1900s
remained focused on researching and developing products or techniques that
would help mitigate property risks and advance the efforts of property
conservation. In 1874, a revolutionary form of loss control entered the
loss prevention scene: the fire sprinkler. While the invention was
designed and later perfected by entities outside the FM realm, it was FM's
support and promotion of the product that aided in its eventual widespread
use and acceptance.
The 20th Century
The beginning of the 20th century brought significant change to the FM
companies. Where once the mutual insurance companies focused primarily on
the familiar business of textiles primarily within the Northeast region of
the United States, new companies began to form that sought business beyond
the traditional geographical boundaries.
These mutuals began branching out into other industries, such as shoe and
rubber manufacturers, foundries and light, and gas and power companies,
while still maintaining their preference for HPR properties.
During the next 75 to 80 years, the need for more comprehensive
policyholder coverage grew, forcing a series of consolidations among the
FM companies. By 1987, 42 separate mutual insurance companies had become
three: Allendale Mutual Insurance Company, Johnston, R.I., USA; Arkwright
Mutual Insurance Company, Waltham, Mass., USA; and Protection Mutual
Insurance Company, Park Ridge, Ill., USA.
The three separate organizations found it difficult to deliver
competitively priced, value-added engineering services in a marketplace
full of increasing competition and a demand for more challenging property
protection programs. The three companies were sharing the resources of an
inspection group, yet were competing with one another for customers. In
order to reduce competition and costs, in 1998 the CEOs announced their
intent to merge the three companies to create FM Global. The merger was
completed in 1999.
FM Global enjoyed considerable growth after the events of September 11,
2001 due to the signing of a re-insurance agreement shortly before the
terrorist attacks. Shortly afterwards, re-insurance rates increased
greatly. Competitors without such favorable contracts were unable to
provide as much insurance as they could not afford the higher re-insurance
rates. As insurance premiums increased drastically, FM Global enjoyed
extremely high profits and a great increase in market share.
FM Global Today and Tomorrow
Nearly two centuries after Zachariah Allen's "simple" premise of
making property improvements to reduce risk, FM Global has emerged as an
international property insurance and loss prevention engineering leader
with US$3.9 billion of in-force premium, US$4.4 billion in policyholders'
surplus, and the resources to serve clients in more than 100 countries.
FM Global Research Campus
FM Global’s 1,600 acre (648 ha) Research Campus in West Glocester, R.I.,
USA, is their center for property loss prevention scientific research and
product testing. Here, FM Global helps their clients understand how to
prevent physical concerns from affecting their properties and business
operations.
