across the grounds: one each for fire, natural
hazards, electrical hazards and hydraulics
(where mechanical and environmental
tests are performed on safety-system
components to ensure effectiveness).
“Our mission here is to make sure
that our clients’ facilities are protected
from perils like fire, flood, tornadoes,
hurricanes and explosions,” says Jay
Cannon, an assistant vice president at
FM Global and NU’s host during its visit
to the campus. “Our field engineers use
what’s learned here to offer clients loss-
prevention advice to reduce the likelihood
of a natural or man-made event having a
major impact on their facilities and their
business. We want [hazardous incidents]
to be a distraction not a disaster.”
Running such a massive research
campus, with its cutting-edge
equipment and Ph.D.-possessing
staff, obviously represents a significant
investment for FM Global. But the science
done at the facility—by far the largest of
its kind in the insurance industry—isn’t a
nice-to-have, ancillary component of the
insurer’s business; it plays a core strategic
role. To a large extent, the carrier relies on
the lab’s research—not loss-history data—
to underwrite its risks and reduce the
number and size of claims.
And this unique approach appears to
work—at least in years without an inordinate
more than $1 billion the 2010 figure.
“Although the frequency and severity
of the natural-disaster losses were our
highest on record in 2011, we didn’t find it
necessary to modify our risk-assessment
and risk-improvement practices at the
policy level,” FM Global CEO Shivan
Subramaniam says in a statement,
underscoring his belief in the value of
the work done at the research campus.
FM Global’s leader also noted that his
company’s client-retention rate in 2011
was a sterling 96 percent.
DIGITAL EXTRA: VIDEO
NU takes you on a tour of three leading insurance
research labs—including FM Global’s explosion
bunker, seen in action above.
number of natural catastrophes. In 2009, FM
Global’s combined ratio was an impressive
67.2. In 2010, it was a still-strong 78.4.
But in the now-infamous year of 2011,
with its tsunamis and EF- 5 tornadoes against
which no amount of engineering can defend,
FM Global’s combined ratio climbed to 121,
with its net losses from disasters exceeding by
CLIENTS DON’T GET BURNED
The factors that influence a client to
switch insurers are innumerable, but
FM Global’s fire lab certainly helps sway
at least some to stay.
Fires are a major cause of property
loss worldwide, and FM Global didn’t
skimp when it built a lab designed to find
ways to control and extinguish flames at its
The two-acre enclosure is the world’s
largest fire-test lab for property-loss
prevention. It’s easy to imagine the playing-field-sized space serving as the soundstage
continued on top of page 16
Chubb Insurance: All Fired Up
BY BRYANT ROUSSEAU
SETTING FIRES in the workplace is frowned upon by most employers, but at Chubb Insurance it’s an activity that’s not only actively encouraged—it’s
actually an essential part of the company’s
For Chubb, a major global source of
property insurance, it’s crucial that its
best practices in fire protection. Indeed, a key
part of its strategy in avoiding catastrophic
claims is to make sure both policyholders
and those responsible for evaluating a
building’s risk profile have some hands-on
experience with sprinkler systems and other
use-it-or-lose-it fire-protection technology.
Chubb built its first fire lab in the 1980s.
Today, it has a best-in-class training center
Students at the Chubb lab
get smart about fire protection
GET WHAT YOU PAY FOR
Of the many classes offered at the Chubb
facility, one teaches how clients can review
sprinkler plans properly to ensure a new
installation is going to meet code—and deliver
on all the fire-protection promised.
located on its corporate-headquarters
campus in suburban New Jersey—a facility
used to teach between 700 and 1,000
students a year. Those attending include
Chubb staff, independent producers,
insureds and fire officials from around the
country and across the globe.
Not surprisingly, the carrier’s loss-control
engineers treat the lab as a second home—
and are constantly taking classes to keep
informed about the latest best practices,
code updates and improvements in fire-protection equipment. But the company’s
underwriters are a familiar presence as well.
“All Chubb underwriters go through
the fire lab, whether they’re [dealing with]
property or casualty,” says Edward Radzinski,
senior vice president and property manager
for Chubb Commercial Insurance.
As property underwriters progress in
their careers and require a higher level
of specialty knowledge to fully grasp all
April 23, 2012 | National Underwriter Property & Casualty | 15