FM Insurance Company has adhered to one philosophy for over 190 years: "Every accident can be prevented." All insurance companies base their premiums on the belief that similar accidents will occur at a similar rate in the future based on past statistics. In contrast, FM provides risk management strategies to its clients to reduce the probability of accidents. This is why FM has become the best in the global insurance market for corporations.
Kwon Seong-jun, the representative of FM's Korean branch, met with ChosunBiz on Feb. 25 at the Mirae Asset Center One in Jung-gu, Seoul, and noted, "FM has grown with a business model centered around safety engineering."
An insurance company compensates policyholders for losses after an accident occurs. FM thought differently. For corporations, the important factor is not the compensation, but accident prevention. If accidents do not occur, the insurance company does not have to pay out claims. Since its establishment in 1835, FM has focused on research in safety engineering to prevent accidents and disasters, and has now grown into the world's largest property insurer.
FM's key personnel are safety engineering engineers, not financial experts. Of the more than 5,600 FM employees worldwide, 1,980 are engineers. The largest research facility in the world, the "FM Research Campus," which experiments and conducts research on scenarios such as fires, strong winds, explosions, and floods, is also one of its core competencies.
FM, which has a unique business model for an insurance company, entered the Korean market in July 2022 after receiving full approval from financial authorities. Rather than increasing the number of clients for revenue, FM seeks partners who can realize its philosophy.
Kwon Seong-jun, the representative of FM's Korean branch, who worked at a domestic insurance company for nearly 20 years, joined FM against this philosophy. He said, "Until now, I have suggested to clients that they need risk management, but I had nothing to say about 'how' to do it. I believe FM has the capability built over 190 years to realize accident prevention." He added, "I do not think clients will increase immediately in Korea," and noted, "The goal is to expand the base of consulting so that Korean society can become safer."
—Many readers may not know what kind of company FM is.
FM's philosophy regarding risk management is what makes it distinctly FM. Insurance companies predict that similar incidents will occur in the future based on past accident occurrence statistics and set their premiums accordingly. However, FM believes that all accidents can be prevented. To prevent client accidents, FM provides risk management solutions based on scientific research and offers consulting to ensure compliance.
—It might seem obvious that preventing accidents is the best course of action. However, it is rare to hear of an insurance company providing consulting services.
All insurance companies know that preventing accidents is important. They also know how to do it like FM. However, they cannot create specialized solutions for property insurance overnight by hiring thousands of engineers. FM conducts experiments and analyzes data while recreating actual scenarios with hundreds of engineers and scientists at the world's largest testing facility, the FM Research Campus. FM has studied every natural and man-made disaster that could affect property for 190 years because it solely focuses on property insurance. This is why FM has developed capabilities that other insurance companies cannot possess.
—What is the reason for entering the Korean market?
For over the past 50 years, our parents' generation has worked incredibly hard. As a result, Korea has become a major economic power with a strong manufacturing base worldwide. The semiconductor and shipbuilding industries are also among the best in the world. To create such a country, there was no room for reflection. It may have been destiny. However, it is now time to pay attention to safety. I believe FM can contribute significantly in this area. A safe society cannot simply be wished for; it requires capability. In a way, I think FM has brought a new philosophy to Korea. I believe that if we continuously voice fresh ideas, the casualties from accidents will gradually decrease.
—I am curious about the specific process for underwriting insurance contracts.
Before underwriting an insurance contract, we dispatch 3-4 engineers to the business site for more than a week to assess and provide strategies on how to improve risks. This is not just a request to install sprinklers. We provide specific solutions on how much and where to install sprinklers efficiently based on each factory's equipment and characteristics. We also cater to the unique risk management needs of individual corporations.
—If you are trying to sign up for insurance in preparation for an accident, it may be perplexing for clients if the insurance company demands they strengthen their facilities. There may be clients who don't like incurring additional expenses.
Other insurance companies do not require the installation of sprinklers. Because of this, it takes corporations a long time to understand FM's requirements. From the company's perspective, they are not doing anything illegal or going against regulations, so it is hard to comprehend why they need to do more. FM continuously explains until clients understand. Therefore, I do not believe that domestic corporations will quickly understand and agree with FM's philosophy in a short period. We aim to provide solutions based on scientific analysis, allowing the entire industry to improve.
—I have heard that if clients do not accept the solutions, FM does not underwrite the contracts. Is this not a poor choice in terms of performance?
Internally, FM compares signing a contract to a marriage. It implies that we must be together forever. The average duration of contracts with FM is over 20 years. Disney has been under contract with FM for more than 76 years. There are clients who have been with FM for 100 years. FM must show trust to its clients, but clients must also fully understand FM's philosophy for a contract to be successful. Once a client becomes a member of FM, continuous risk management occurs, which is greatly advantageous. FM has grown for 190 years with this business model and has become the strongest insurer in the global market that serves corporations.
—I am curious about which sectors you consider as major clients domestically.
FM believes it is competitive across the manufacturing sector as a whole. The area of particular interest is secondary batteries. FM thinks it can contribute not only to battery manufacturers but also to sectors involved in the battery manufacturing and sales process. Specifically, it has established standards for how to manage risks related to energy storage systems (ESS) over the past decade.
—What are your future plans?
FM did not come to Korea to conduct transactions with corporations. FM has a contractor surplus of $22.3 billion (approximately 32 trillion won). We do not want to profit by getting overly emotional about each contract. While of course we want to help our clients, we also wish to contribute to enhancing safety in Korean corporate society. We are currently conducting fire tests with the Korea Construction and Living Environment Testing Research Institute, which operates the largest testing facility in the country. We will approach this with the aim of improving the risk management standards that Korean society possesses.