How commercial insurer FM Global uses data science to reduce client risk
It should come as no surprise that the commercial property insurer FM Global, which claims one-third of all Fortune 500 companies as customers, collects plenty of data to guide how it rates policies and sets prices.
What’s more surprising is the way that the almost 180-year-old insurance company uses information gathered for more than 60,000-plus sites to help clients understand risk and, if they’re inclined, make improvements to prevent losses.
FM Global relies on close to 1,800 engineers to collect up to 500 digital photos, notes, and data points for every building or property. Those metrics include construction parameters, occupancy patterns, geographic information and other factors that affect overall risk assignments. That data is processed on an ongoing basis and presented as part of an analytics service called RiskMark. Risk managers log in to see how properties rate across their portfolio. FM Global even offers recommendations for improvements, such as construction to reduce flood risk or fire prevention technologies that might also benefit security and safety.
Sure, other insurance companies probably offer similar insights. What’s different is that FM Global’s calculations are made quickly, based on actual data, not on averaged actuarial estimates made in a back office somewhere.
“We take the data and look at what drives the severity of loss at a location,” said Ronnie Gibson, chief engineer for FM Global. “Clients can compare relative risk from one location to another. They can see a ranking of their locations.”
Equally as intriguing: organizations can compare their standings against aggregated industry trends. “This is where this information really comes to roost,” Gibson said.
FM Global originally invested in this service to inform internal decisions. Its reason for sharing that information is self-interested: when insured properties improved to mitigate losses, that’s good for FM Global.
But it can also be good for its customers because it helps them prioritize risk management strategy and could get them better rates. “There is a financial incentive to go there,” Gibson said, adding: “It’s the right and proper way to make sure they do not spend a penny they do not need to spend.”
This item first appeared in the Dec. 9 edition of Data Sheet, Fortune’s daily newsletter on the business of technology. Sign up here.