James Galloway serves as executive vice president for FM Global, overseeing international operations and the commercial property insurer’s middle market division.
Galloway has worked for FM Global since 1986 and has a bachelor’s degree in petroleum engineering from the University of California Berkeley. He also is a chartered property casualty underwriter designation.
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PBN: What key advice would you offer to risk managers on commercial property insurance in this time of continued economic uncertainty?
GALLOWAY: Investing in resilience has its rewards. During times of economic prosperity or uncertainty, to be resilient requires companies to look ahead, map risks as they emerge and evolve while proactively developing and testing business continuity plans so a company is ready for the unexpected.
Companies should invest in risk improvement because an insurance policy can never make you whole again following a loss. Being well-protected can lead to better terms and conditions from an insurer. As we often suggest businesses be mindful of, “insurance alone is not enough.”
PBN: Is that advice different now than what you would have said pre-COVID? If so, how? If not, why is it the same?
GALLOWAY: While it’s understandable for businesses to be distracted by the COVID-19 pandemic, our advice is timeless – simply put, it is important to understand your risks, seek to prevent or reduce the potential for disruptive events, like fires, extreme weather or equipment failure, and have insurance as a backstop to protect your bottom line. Such ever-present property-related risks remain even when the pandemic passes
PBN: How has the pandemic changed or exacerbated existing trends in commercial property insurance?
GALLOWAY: Several trends are having much more of an impact than the pandemic. Importantly, there have been declining rates industrywide for more than a decade for large commercial property insurance, for example, while many carriers have offered broader coverages. At the same time, those insurers have been contending with increased property risk and underreported property values, which have made the industry unprofitable and no longer able to sustain the rates of years past. Commercial property insurance rates will continue to increase in 2021, but those companies investing in property risk improvements can make their overall business more resilient.
PBN: It seems like risk assessment and management is more important than ever to companies, yet potentially harder to calculate in this uncertain world. How has FM Global changed or adapted its calculation and management processes to account for an unprecedented economic time?
GALLOWAY: Helping clients assess, manage and improve risk has been FM Global’s approach since our founding in 1835. It is what we live and breathe in any economy or market cycle. We believe that the majority of loss is preventable, not inevitable, and the best defense for any organization is to be committed to resilience by implementing smart, sound and cost-effective measures that can prevent or reduce a loss and ensure business continuity.
PBN: What long-term impact do you think the pandemic will have on risk management and strategy?
GALLOWAY: If a company has a long-term commitment to risk improvement because they believe it is the best way to protect their value for their customers, shareholders and employees, they will be the organizations likely to be most resilient to a pandemic, a fire, or even a natural disaster. Studies have consistently shown that companies which invest in loss mitigation can better react to periods of crisis and, in the long term, gain a competitive advantage. While many businesses’ budgets for risk improvement may have tightened as a result of COVID-19, the pandemic reinforces the need for having a thoughtful long-term risk strategy and implementation.
Nancy Lavin is a staff writer for the PBN. Contact her at Lavin@PBN.com.
