FM pours resources into risk mitigation with new research facility
FM began construction on its third research facility in Luxembourg in March 2024
Firm’s mutual structure, business model and engineering workforce give it an edge in risk mitigation, mutual's head of London operations, Bill Bradshaw, says
US-based mutual insurer FM is devoting increasing resources to helping its policyholders meet systemic risks from climate change, including building a new research campus in Luxembourg.
Bill Bradshaw, head of operations at FM’s London office, says the company takes a long-term approach to risk mitigation, and its mutual structure and monoline commercial property business model support this vocation. “We can help clients, in the long term, tackle some of these risks," Bradshaw says, adding: "Some of them can take a long time to put in place solutions for."
FM began construction on the Luxembourg campus last March. This will be FM’s third research facility, in addition to installations in the US and Singapore. FM expects the new campus to come online in 2027. Since 2017, FM has run its European operations from Luxembourg (it has had a London presence since 1963).
Luxembourg
Boris Stroujko/Adobe Stock
Company engineers use the facilities to study the physical risks that affect infrastructure and appliances and develop solutions. Bradshaw mentions FM’s work on crafting more durable solar panels, strengthening roofs and examining the fire dangers of lithium-ion batteries.
As a mutual, FM can also provide credits for risk mitigation. Mutuals do not issue dividends, but can provide credits to policyholders. According to its 2024 annual report, FM has distributed $6.6bn in credits since 2001, including a $1.4bn credit in 2024/25.
Since 2022, FM has provided what it calls “resilience credits”, which help clients reinforce insured properties against severe weather, particularly with a focus on climate change or sustainable projects, Bradshaw says. Over three tranches, FM has distributed slightly more than $1bn in these credits.
Bradshaw says FM’s credits are “probably the most powerful” tool the firm has to influence client behaviour and encourage them to address systemic risks.
Like any other insurer, FM can also encourage better risk management through pricing, although Bradshaw notes “we’re in a very competitive market”.
According to its 2024 annual report, FM's in-force premiums grew 6.6% to slightly more than $11bn. Its consolidated loss ratio was 51.5% – well below the planned ratio of 71.6%. “Our loss ratios are typically much lower than the rest of the markets for our clients,” Bradshaw says, adding this allows the company to invest in research and provide extensive credits to its clients.
Bradshaw says FM has built a loyal customer base, noting the majority of its clients have been with FM for 15 years, and 80% for five years. “We're about offering very stable amounts of large capacity to our clients that need it,” Bradshaw adds.
Bradshaw says the main macro risks FM clients face have remained stable for the past decade or so. “Cyber is always up there,” he says. He also mentions supply chain disruptions.
"I would say, in terms of top three at the moment, climate, technology and geopolitical are probably the three that stand out," Bradshaw says.
He adds climate is a universal peril, and becoming an increasing worry in Europe, with sharp increases in hailstorms and other severe weather events. More broadly, Bradshaw notes natural catastrophe insured losses have exceeded $100bn over each of the past five years.
Bradshaw adds some natural disasters, such as floods, have become more difficult to predict, citing last autumn’s flash floods in Spain.
