FM: Loss prevention must be at the heart of captive strategy
Loss prevention and insurance should work together as part of a broader approach to managing risk, according to Nancy Campuzano, client service manager, forest products at FM.
Key points:
Loss prevention should lead strategy
Data can help identify key risks
Emerging risks demand new thinking
Speaking to FERMA Forum Today, Campuzano said FM’s role was to help clients and their captives understand the risks they face and use that insight to make informed decisions about how to manage them.
“I believe it’s thinking that the insurance will solve it,” she said. “The reality is that loss prevention is the best insurance if you can work with your teams and put measures in place.”
Rather than treating prevention and insurance as separate considerations, FM’s approach combines insurance with science and engineering to address risk, with loss prevention helping clients strengthen resilience and business continuity.
FM is a commercial property insurer with about 1,600 clients worldwide, of which Campuzano said around 5% to 7% use captives. The company has supported captives since the 1970s, with Campuzano describing the captive as a financial tool for clients.
Science, engineering and data
Campuzano said FM could add value by helping captive owners understand the risks they retain and identify practical measures to manage them. Its approach combines site-specific information with research, loss experience and engineering expertise.
FM collects about one billion data points every 10 years, she said, but the value of that information lies in how it is used to understand individual risks.
“When you have reliable information, the data points that we collect are from the field, so from their actual locations on their actual conditions,” Campuzano said. “That is a very powerful tool to be able to understand the risks that you’re taking as part of your captive strategy, and also manage the financial risks that you’re taking.”
FM’s field engineers visit client sites and gather information about their actual conditions. Loss prevention reports then allow account teams to identify and prioritise the main risks alongside the client.
That process brings together information from the physical risk, FM’s research and its experience of losses, with engineering expertise helping turn the resulting insight into practical measures.
Campuzano said the objective was not simply to identify risks, but to reduce their potential impact on the business. Depending on the level of captive participation, the captive can be directly exposed to the risks identified through the assessment.
“What we believe overall is the company is reducing its risks, and that is the benefit for everybody, the insurer and the captive insurer,” she said.
The measures can cover several layers of protection. Campuzano highlighted human element programmes designed to ensure practices are standardised and aligned, as well as emergency response programmes.
Physical protection can include sprinkler systems, automatic shut-off equipment and boiler and machinery maintenance practices. Natural hazards are another consideration, with clients encouraged to understand their exposures and identify opportunities to mitigate them.
Building resilience
The emphasis on prevention also forms part of a wider effort to help businesses remain resilient as their risk environment changes.
Among the risks FM commonly encounters are fire, equipment impacts and natural hazards. Campuzano said FM’s research was focused not only on understanding current risks but also on identifying emerging ones.
“I don’t think we ever had recollection of these big hailstorms where you could see hail of the size of a baseball, and now it’s more common every day.”
Geopolitical developments are changing risks around supply chains, raw material availability and transportation, she said. At the same time, climate-related exposures such as convective storms, hail and wildfire are becoming an increasing area of focus.
Campuzano highlighted severe weather in Europe in particular, pointing to the growing significance of large hail events.
“I don’t think we ever had recollection of these big hailstorms where you could see hail of the size of a baseball, and now it’s more common every day,” she said.
For clients and their captives, understanding these changing exposures is important not only in assessing potential losses but also in identifying ways to protect operations and maintain business continuity.
“How can we better understand these risks? How can we prevent and mitigate it?” Campuzano said. “That’s where we should be focusing.”
She said FM’s approach involved working with clients and their wider risk partners to understand the exposures and determine how they could be addressed. Captives, clients and brokers all form part of the wider insurance ecosystem through which risks are assessed and managed.
AI and the human element
Technology could also support this approach, with Campuzano highlighting artificial intelligence as an area where FM is considering both opportunities and risks.
She said FM was looking at AI from two perspectives. The technology could help make use of the company’s data, research and loss experience to support risk prevention and advice to clients. At the same time, AI introduces risks that need to be understood and managed.
For Campuzano, the technology should complement rather than replace human expertise.
“We shouldn’t forget the I on there, and that’s the main differentiator,” she said. “How do we use it as a tool without losing the human and the human connections too?”
The principle reflects FM’s broader approach to risk: combining data with scientific research, engineering expertise and experience to turn information into practical action.
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