Roberts: FM building new products to weather soft cycles amid unprecedented 'light switch' property market conditions

By James Thaler

June 29 - (The Insurer) - FM CEO Malcolm Roberts said developing new products will allow the mutual to better weather soft cycles as he described the current property insurance market as experiencing unprecedented volatility, noting he's never seen conditions change so dramatically in his 30-year career.

"I've never seen a market go on in 18 months like a light switch; it goes up 200% and then we start giving rate back within 18 months," Roberts said during an interview at last month’s RIMS Riskworld event in Chicago.

The executive expressed empathy for clients who have faced challenging conditions over the past five to six years.

"I can tell you, as a buyer of reinsurance, I've been feeling it in the last two, three years, so I have empathy with my clients as well," he said.

Roberts indicated the market is beginning to stabilize, with rates starting to decline.

"We're starting to see rate come off," he said, noting that when factoring in membership credits, FM clients start off getting discounts ranging from 10%-15%.

"So on the 100% programs, we're going to always be competitive."

Roberts said FM is seeing modest rate reductions compared to dramatic cuts reported elsewhere in the market.

"We're not seeing any of that. We're seeing a slight bit of rate erosion, in the low single digits," he said, addressing reports of 40% rate reductions in the London market.

Roberts explained that dramatic rate cuts are occurring primarily in excess layers where opportunistic capacity had previously driven prices up significantly, by anywhere from 100% to 200%.

"Brokers and clients (are saying), 'the minute I get a chance to get rid of them, because they hit me hard, get rid of them'. That group's made money, and they've now got capital to deploy," he added, saying that such capacity providers now might be willing to accommodate 80% rate reductions after previously pushing 200% rate increases.

He emphasized that core insurance programs are experiencing more moderate reductions of 5% to 15% rather than the headline 40% figures.

Looking ahead, Roberts expects clients to receive some relief.

"I think clients deserve {over} the next year or two some rate relief," he said.

Roberts also noted that FM expected its reinsurance costs to decrease by 10% to 15% or more at its July 1 treaty renewal.

However, he cautioned that the market remains fragile due to several factors including tariffs, rising loss costs and climate concerns, citing wildfire losses that already reached $50 billion in early 2025 as evidence of ongoing volatility.

Despite challenges, Roberts said the insurance industry remains well capitalized and that market fundamentals remain strong.

"I think the good thing for clients is the industry is very healthy. Primary (insurance) is well capitalized. Reinsurance has got more capital than it's ever had," he said.

DIVERSIFICATION TO MANAGE CYCLE

Roberts also commented on the mutual's strategy of diversifying its product lines in order to navigate market cycle shifts.

"In soft market cycles, (capacity) starts to come back in again. And then it all falls apart, because (clients are looking for) big limits, they can't commit to the risk improvement," he said.

The CEO's solution involves creating multiple business pillars to provide stability.

"So I said, 'We need products to withstand, so the mutual can shrink. (Clients') rates go down and (we can) say, ‘That's okay, let the mutual shrink,'" Roberts explained.

"There's four or five other pillars that now we lean into when we need to and we make sure we don't bring that risk into the mutual that's not ready for it into it," he added.

The Insurer and sister publication E&S Insurer reported on Monday that FM is piloting a new middle-market product, FM Essential, and that it plans to use recently acquired Velocity Specialty Insurance Company as a vehicle for expansion into E&S.

The new offerings represent part of FM's broader growth strategy, which includes FM Renewables, FM Affiliated for soft occupancy risks and the flagship FM HPR product.