Data is FM's 'secret sauce' while analytics key to expanding addressable market, CEO Roberts says

By James Thaler

June 29 - (The Insurer) - FM is leveraging its vast data resources and analytics to expand its addressable market while maintaining its focus on property risk, according to CEO Malcolm Roberts, who emphasized that data, not AI itself, remains the company's “secret sauce.”

"If it's property risk, we're going to be involved, because we're not going into casualty, we're not going to financial lines. We know property," Roberts said in an interview with The Insurer at last month's RIMS Riskworld event in Chicago.

The company is using advanced analytics and AI to scale its engineering expertise without significantly expanding its workforce.

"The unlock has been the analytics, data, AI tech, the advancement last five years," Roberts explained.

"Now I don't have to go hire another 1,000 engineers to do these products."

When asked about AI integration, Roberts emphasized that FM competitive advantage lies in its data, not the technology itself.

"Our secret sauce is not the AI, it's the data," he said.

"We collect 1,000 data points on every visit. We've had that for 190 years."

The company's AI strategy focuses on "augmenting the human in the loop" rather than replacing human decision-making, with Roberts expressing caution about over-reliance on AI, warning against losing institutional knowledge.

"I don't want the computer making the final decision," he said, adding that clients "are still buying a brain" when they work with FM.

"My clients are still buying someone who can say, 'Yeah, the data says that, but I've seen that 500 times, I have the authority to override it'," he noted.

“I've had a fear here of, how do we use AI and not make it make us more dumb as an organization?" he added.

FM has maintained a dedicated AI team for three to four years, focusing on augmenting rather than replacing human expertise.

"What we're trying to do with our underwriting teams, our engineering teams, is to help them make decisions faster, not replace the decision," Roberts said.

The technology is accelerating knowledge transfer to engineers through tools like iPads that provide real-time information during site visits.

"Our AI tagline is augmenting the human in the loop, we're not trying to replace the human in the loop," Roberts noted.

Roberts sees AI's primary value in accelerating knowledge transfer and improving operational efficiency.

"So what may have taken five years to get an engineer up to speed, we may be able to get to them to year five by year two or three," Roberts noted.

He sees AI's greatest potential in expanding FM's addressable market, particularly for higher-volume business lines and argues that growth is essential for maintaining relevance in an increasingly risky world.

The Insurer and sister publication E&S Insurer both 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.

"I want to use it to get quicker filters to get us down to the ones we want to work on quicker," Roberts said.

He explained that capacity constraints currently limit FM's ability to handle all viable opportunities.

"We got 100 submissions in the month in New York, and they'll pick the 10 that they could work on (where) they could have picked 20 more," Roberts said.

He added: "Growth sometimes gets a dirty word in our company, because we're private and mutual, so we don't have to grow. But I use the word growth for relevance."

Roberts emphasized that the insurance industry must provide engineering solutions rather than avoiding risks.

"If we keep running from that risk, we're not needed. Other capital providers will find a way to provide that over time," he warned.

He also argued that FM has "a very unique value prop, and it brings real value."

"And as the world keeps getting riskier and riskier, I think there's more customers and prospects who would love access to that, and that's relevance to me."