‘We’re not out there trying to grow faster than our competitors … we don’t need to do that.’
It’s not the kind of thing you expect hear from the head of an insurance firm, but this is what the chairman and chief executive of one of the world’s largest commercial property insurance companies told StrategicRISK in an exclusive interview.
Shivan Subramaniam runs FM Global, a concern that insures $7trn in business property in more than 125 countries. He has been the company’s president and chief executive since 1999, and chairman since 2002, so this strategy is clearly working. But how?
“As a mutual company, there’s no great demand to grow and be measured as a publicly traded company – we don’t have those pressures on us,” Subramaniam explains. “What we do is find the right client with a focus on risk improvement and if they think they could use our capabilities, that’s where we go.”
FM Global has an engineering-based approach to underwriting, loss prevention and risk management; one that it is now employing across Asia. The company underlined its interest in the region last year when it moved the then senior vice-president of marketing and enterprise learning, Chris Johnson, from the US to Singapore. He became senior vice-president, Asia Pacific, a new position created in response to client expansion in the region.
Subramaniam says it was simply a matter of moving management “closer to where the growth is”. “Having a divisional headquarters in Singapore made a lot of sense,” he explains. “This is where we believe our growth is going to come from, as it has for the past five years.”
But it might not be the kind of growth that you’d expect. “If you look at the Asia-Pacific, a lot of our growth is not indigenous growth, it’s really growth of clients growing from outside Asia-Pacific into the region,” Subramaniam says. “In the past five years, our overall worldwide client location growth has been about 5%. However, if you just look at Asia, it is 27% growth.
“Because we’re a mutual company, our focus is entirely on our existing policyholders because they’re our owners, and if you think about that and you ask where are they growing, they’re growing the most in Asia and the Pacific. Our strategy is all about following our clients. They are going to Asia and the Pacific, so we’re expanding our oversight and governance in this part of the world.”
Subramaniam adds that a small but growing group of clients is also beginning to come out of the APAC region itself. “We’re starting to become very appealing to them as they become much more efficient in their processes,” he says. “As they become more lean and more focused – so they have no redundancy in their business processes – any kind of interruption in the business process is going to cost them a lot of money and business reputation lost. Our focus is on helping them to not have that interruption.”
This change of focus often occurs as local businesses become multinational, Subramaniam points out. “That’s when our appeal to them starts to go up quite dramatically,” he says. “Whether they call it risk management or not – they might call it business resiliency or they might call it streamlining – the need for our kinds of services starts to become more important.
“But, again, being a mutual organisation we can take our time to build our expertise and knowledge, and we can go slowly in terms of our indigenous book of business.”
FM Global offers services such as broad-based and specialised risk-management services and insurance products, tailored risk-transfer options, alternative risk financing for hard-to-find coverage, and customised property-loss prevention and control-engineering services. Indeed, it is evident that Subramaniam puts great trust in the company’s engineering expertise. A qualified mechanical engineer himself, he is in charge of more than 1,800 engineers and one of the industry’s largest research operations.
The company’s policy is to hire engineers straight out of college or mature engineers who have worked in other companies, and to train them all in loss-prevention engineering. This process involves several trips to the US in the first two years, as well as a host of other training and mentoring programmes. “One of the things that makes us attractive to engineers is that we’re probably the only organisation where you can start as an engineer but have the opportunity to do a lot of things after a few years,” Subramaniam says. “They become underwriters, claims people, sales people, and quite a few of them become operations managers, so what that does it gives us the ability to attract a very different kind of young engineer who tend to be people who don’t want to send rockets to the moon, but who really want to use their technical ability to do other things.”
Subramaniam believes that this is the best way to attract top talent from a variety of areas. He says that FM Global is one of the only companies that operates along these lines and, as such, its engineers can become targets for other brokers or insurance companies looking for expert loss-prevention engineers.
“Hiring is not the big issue for us,” he says. “The big issue is making sure they get past the first three or four years and not get taken off us by somebody else.”