Mutual Benefits

Back in 1835, the idea that you could get money off your insurance premium because you'd made some loss prevention improvements to your cotton mill would have seen you laughed out of the ale house. That was until Zachariah Allen asked his insurance company just that. He'd made improvements to the Rhode Island mill that housed his textile business that would specifically reduce the chance of fire and subsequent loss, and rightly expected that his premiums should therefore also be reduced.

 

His request was denied, but for Allen the seed had been planted. He joined forces with a group of other local textile mill owners who shared his philosophy, and together they created a mutual insurance company that only took on 'good risk' clients. It was the foundation of the first insurance company to offer insurance premiums based on loss prevention – and the predecessor to FM Global, named 'Best Property Insurer in the World' by Euromoney Magazine in 2008.

So what's it all about? Well, FM Global offer its policy holders dividends, or membership credit, based on whatever premiums remain at the end of the policy term, the same principle as when Allen started his loss prevention insurance scheme. All because the companies they insure have made property improvements that considerably reduce the risk of loss from fire.

The Factory Mutual loss control inspectors soon became not only qualified in inspection, but were ideally placed to recognise where industry improvements and new fire prevention methods could be researched and introduced. And so, in the late 1800s, when the early fire sprinkler systems started to appear, it was Factory Mutual who became key in their development, promoting sprinklers and turning them into the most widely accepted form of fire prevention.

Today, FM Global has clients in more than 100 countries around the world, and it's still at the forefront of sprinkler development. Its US Research Campus tests the latest innovations in sprinkler hydraulics, and the companies who continue to install effective fire defense still reap the financial benefits of having mutual friends in safe places.