FM Global
From Wikipedia, the free encyclopedia
FM Global is a U.S.-based company with offices worldwide that specializes in property protection and provides insurance and risk management services to many of the world's largest organizations.
FM Global provides customers with a better understanding of their risks and helps them develop sound loss prevention solutions that safeguard their properties and minimize financial impact to the customer and insurance company if a loss occurs.
FM Global bases its risk improvement recommendations on engineering and research. The foundation of this is their belief that the majority of 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 40 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.
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[edit] 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.
[edit] 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.
[edit] 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.
[edit] FM Global Today
FM Global saw 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 in the industry increased drastically, FM Global's market share increased significantly.
FM Global has emerged as an international property insurance and loss prevention engineering leader with US$4.3 billion of in-force premium (FY2006), US$5.2 billion in policyholders' surplus (FY2006), and the resources to serve clients in more than 100 countries.
[edit] 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.
[edit] External links
Business Units
Other
- FM Global Test Center - Article in STRUCTURE magazine (Aug. 2006) about construction at FM Global's Research Campus in West Glocester, RI.
