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Q&A: Thomas A. Lawson, FM Global

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Q&A: Thomas A. Lawson, FM Global

Thomas A. Lawson became president of Johnston, Rhode Island-based FM Global on Aug. 1. Mr. Lawson will also succeed Shivan S. Subramaniam as CEO, effective Jan. 1, 2015, following Mr. Subramaniam's retirement. Mr. Lawson, who previously served as the property insurer's executive vice president, joined the organization in 1979. He recently spoke with Business Insurance Senior Editor Mark A. Hofmann. Edited excerpts follow.

Q: What is the biggest challenge facing you as you take the reins at FM Global?

A: Our mission and values are going to remain the same. We've got great clients, we have great people and a great business model, so my challenge and my responsibility is to make sure all that continues.

The property insurance market is becoming more and more competitive due to the influx of significant and alternative reinsurance capacity. But for us and for our clients, the mission remains the same, and the goal is to work with them to make their facilities as resilient as possible. In addition to that, it is providing stability in a somewhat challenging marketplace.

The advantage of a mutual company is that our owners and our clients are the same people. So unlike a stock company, we're not forced to choose between what's good for the shareholders versus what's good for the clients. For example, when we're making long-term decisions like building a new research campus, we can do what's right long term for our clients. Additionally, because of our mutuality, we're better positioned to absorb the volatility of large-risk property business.

Q: How important is the renewal of the federal terrorism insurance backstop, created by the Terrorism Risk Insurance Act, better known as TRIA? What would happen if the program is not reauthorized?

A: We continue to fully support the extension of TRIA. We agree that it's the best long-term solution for the marketplace. That said, we wanted to make sure we could decrease the uncertainty created by TRIA's potential expiration. To provide our clients with seamless risk transfer regardless of the lack of extension by leveraging our surplus, we've been able to significantly increase our terrorism limits. We're able to offer most clients a $1 billion terrorism limit regardless of whether TRIA goes away. We would like TRIA to continue, but our goal is to protect our clients from uncertainty that the possible expiration of TRIA creates and fulfill our promise to be the market leader in providing large, stable capacity for our clients' risk transfer needs.

Q: Where do you see the biggest advances in loss control techniques and technology occurring in the next few years?

A: We'll continue to explore the outer reaches of protection and loss prevention technology at the research campus that keeps up with our clients' emerging hazards.

We're also focusing on our analytic capability, which allows us to apply that same science to better predict loss at client facilities and allows us to produce benchmarking systems like our new FM Global Resilience Index.

The resilience index takes a combination of loss prevention criteria as well as outside impacts such as business climate and political climate to give clients a picture of the situation in a particular country. This is a good example of something we've developed particularly in regard to supply chain; it gives our clients one more data point in understanding their exposures.

Q: Where do you see FM Global five years from now?

A: As a company that's doing the same thing we've done for almost 180 years — working with clients to understand their exposures and giving them the ability to control their destiny by taking the appropriate loss prevention action.

As technology continues to advance, so will our loss prevention technology, and we'll continue to support our clients around the world regardless of whether they be in Chicago or Shanghai.

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