One of the world’s most unique insurance companies has its sights set firmly on the Asia-Pacific region.
FM Global, whose business model is based around engineers rather than actuaries, recently established a division in Singapore and on a visit to Australia last week Vice President and Operations Manager Ian Berg said Asia-Pacific was their priority.
“For the first time we have taken one of our senior managers from the states,” Berg says.
“Asia-Pacific is the future, it’s where the action is, and so in turn it’s where our focus is.”
FM Global’s point of difference is that it employs no actuaries, instead using engineers to proactively reduce a client’s exposure to risk.
FM Global CEO Shivan Subramaniam says the actuarial model’s disadvantage is that it merely transfers rather than reduces risk.
“If you had two identical clients and one goes with an actuarial product and the other with FM Global’s product, over time the risk profile of the FM Global client will be significantly lower, while the actuarial client’s risk profile will be exactly the same,” he says.
An example came in the aftermath of North Queensland’s Cyclone Larry in 2006. FM Global engineers had made recommendations that clients install additional fastenings around their roofs as it was discovered that the single highest pressure when a wind is blowing is the corner of the roof.
The buildings with extra roof fastenings withstood the cyclone and the business was able to continue trading immediately.
While FM Global is doing their part as an insurance company to take practical steps to minimise their client’s exposures, Berg says ultimately it’s time for local authorities and the federal government to take responsibility.
“Our view is that the increasing losses are due to increasing urbanisation and population in areas susceptible to floods and wind storms,” Berg says.
“The proper way to do things is not to build structures in flood prone areas and that is the responsibility of the authorities who give building permits. We as an industry would like to see a federal approach to consistent flood mitigation and mapping.”