Insurer FM Global allocates US$350 million to support client investment in climate resilience

COMMERCIAL property insurer FM Global has ramped up its credit programme that supports client investment in climate resilience, with a US$350 million allocation this year, up from US$300 million in its inaugural year in 2022.

The “resilience credit”, which applies a 5 per cent premium offset against certain policies, is meant to provide its policyholders with additional resources to guard against extreme weather hazards such as wind, flood and wildfire.

FM Global said the continuation of the allocation comes as last year’s US$300 million translated to accelerated implementation of natural hazards-related recommendations, which drove a potential reduction in economic impact of up to US$20 billion.

Its policyholders had leveraged the credit to invest in flood protection projects such as levees, walls or specialised doors and fire breaks to shield against wildfires, and reinforced roofs for extreme snow, among other risk mitigation efforts, it noted.  

Beneficiaries include American publicly-traded biotechnology company United Therapeutics, and US-based automotive seating company Adient. 

With the announcement on Wednesday (Sep 13), Malcolm Roberts, president and chief executive officer of FM Global, said climate-related perils continue to impact clients and drive the current insurance market, so investing in resilience is “more important than ever”.

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“With the increasing frequency of disruptive events around the globe, our clients need the tools and resources to invest in risk mitigation solutions and support business continuity,” said Roberts. 

“The resilience credit enables our mutual owners to protect against climate change risk today, invest in tomorrow, and make a positive impact on their customers, colleagues and communities.”

The latest tranche of resilience credit will be for policies with renewals or anniversaries between Oct 1, 2023, and Sep 30, 2024. Allocation would be based on eligible premiums in effect 90 days prior to the renewal or anniversary date of the prior policy, the insurer stated.

In November last year, FM Global launched an S$80 million experiential risk management facility in Singapore, called the FM Global Centre. Situated in the Singapore Science Park, the six-storey facility is its base to focus on risk improvements in the Asia-Pacific. Risks being looked at include climate risks, as well as other growth and infrastructure challenges in the region.

Commenting on the risk landscape here, Tan Hian Hong, the insurer’s operations senior vice president and operations manager for Asia, said that Asia is home to some of the most resilient economies as well as some of its least. Thus, companies with a regional presence do find it challenging to build resilience in a variable risk landscape increasingly impacted by climate and supply chain disruption, he added.

Whether the companies’ assets are in Singapore or elsewhere, much of future losses can be prevented with a combination of engineering, insurance insight and expertise, Tan said.

“It is possible to engineer out risk for property and infrastructure, and at the same time engineer in resilience to climate risk and other business impacts,” he said.