“Our mission here is to make sure that our clients' facilities are protected from perils like fire, flood, tornadoes, hurricanes and explosions,” says Jay Cannon, an assistant vice president at FM Global and NU's host during its visit to the campus. “Our field engineers use what's learned here to offer clients loss-prevention advice to reduce the likelihood of a natural or man-made event having a major impact on their facilities and their business. We want [hazardous incidents] to be a distraction not a disaster.”

Running such a massive research campus, with its cutting-edge equipment and Ph.D.-possessing staff, obviously represents a significant investment for FM Global. But the science done at the facility—by far the largest of its kind in the insurance industry—isn't a nice-to-have, ancillary component of the insurer's business; it plays a core strategic role. To a large extent, the carrier relies on the lab's research—not loss-history data—to underwrite its risks and reduce the number and size of claims.

And this unique approach appears to work—at least in years without an inordinate number of natural catastrophes. In 2009, FM Global's combined ratio was an impressive 67.2. In 2010, it was a still-strong 78.4.

But in the now-infamous year of 2011, with its tsunamis and EF-5 tornadoes against which no amount of engineering can defend, FM Global's combined ratio climbed to 121, with its net losses from disasters exceeding by more than $1 billion the 2010 figure.

“Although the frequency and severity of the natural-disaster losses were our highest on record in 2011, we didn't find it necessary to modify our risk-assessment and risk-improvement practices at the policy level,” FM Global CEO Shivan Subramaniam says in a statement, underscoring his belief in the value of the work done at the research campus. FM Global's leader also noted that his company's client-retention rate in 2011 was a sterling 96 percent.

CLIENTS DON'T GET BURNED

The factors that influence a client to switch insurers are innumerable, but FM Global's fire lab certainly helps sway at least some to stay.

Fires are a major cause of property loss worldwide, and FM Global didn't skimp when it built a lab designed to find ways to control and extinguish flames at its insureds' facilities.

The two-acre enclosure is the world's largest fire-test lab for property-loss prevention. It's easy to imagine the playing-field-sized space serving as the soundstage for a Hollywood blockbuster for which the script calls for lots of screen-filling explosions.

But the key point of the fire lab is not so much its size, but the types of tests done here. Whether the technicians are burning whiskey barrels or setting gasoline ablaze, the experiments aren't just theoretical exercises whose results might have partial applicability to some client situations.

The climate-controlled lab, big enough for three separate testing areas under its roof, is all about researching custom solutions for clients. With a movable ceiling that can be lowered to 10 feet or raised as high as 60 feet, and with the capability to match the exact placement of sprinklers in a client's building, the lab can replicate with exacting detail the conditions of an insured's facility—down to the layout of containers and what's stored inside.

So clients can see simulations of their worst-case fire scenarios—and FM Global's scientists can gather and analyze the data they need to recommend the materials and fire-protection systems just right for this specific risk.

For example, on the day NU was on site, the lab's own firefighters, in full gear, set a 30-gallon heptane fire. The flames and smoke (see accompanying video on p. 15) shot up into a 20-megawatt calorimeter, which is used to measure the heat generated and to gather the particles released. This information is studied and then translated into a loss-prevention program tailored for the client.

“We need to understand how a particular fire behaves in order to best know how to protect against it,” Cannon explains.

WIND, WATER, WOBBLES

The efforts undertaken at the research campus are, of course, not fun and games: The work yields untold millions in savings and keeps businesses—and their employees—going after a potentially devastating event.

But the experience of visiting the center does have something of the sense of a trip to a science center about it, mixed with just a bit of an amusement park: A lot of exciting action takes place.

Cannon agrees that people enjoy working here—a lot. “Maybe too much,” he says with a laugh, pointing out that this is the perfect place of employment for scientists with a thrill-seeking streak.

And seeing—and definitely feeling the full heat of—the heptane-fueled fire was an intense few minutes. But Cannon says the natural-hazards lab, our next stop, is even more stimulating.

This is the lab where FM Global seeks ways to avoid or minimize claims from floods, hurricanes, tornadoes and earthquakes. And the research done here might be even more valuable than that done in the fire lab—if for no other reason than the odds of an insured facing a natural hazard are greater.

“If clients do the right thing [in terms of taking safety precautions], the likelihood of a fire occurring at their property is low,” says Cannon. “They're much more likely to a see a natural catastrophe. It's a much higher chance; it's not a matter of could it happen, but when it will happen.”

When it comes to earthquakes, “buildings constructed to recent seismic codes typically fare well; the building won't collapse,” Cannon notes. What FM Global is concerned with are the goods inside a building and the fires that can follow a big shake.

Its 10×10-foot earthquake-shake table helps the carrier investigate preventative measures. It can move in six different directions and at 3G speed—the sort of force experienced by a fighter pilot in flight—and it's capable of replicating the parameters of any known quake.

One use of the shake table is giving clients a powerful demonstration of what a difference the right shelving can make in keeping products safe. On the day of NU's visit, two shelves stacked with boxes were on the table. One shelf was bolted to the floor; the other was attached to a base isolator, which allows the shelf to be almost free-floating above the floor.

A switch was flipped, and the shake table sprung to life, rocking violently: The force on display was of greater magnitude than the March 2011 Japan quake. The boxes on the shelf bolted to the floor soon started dancing and then tumbling to the floor, their contents smashed. The boxes on the base-isolated shelf were all still safe and sound when the test concluded.

“We do these tests to determine the best solutions to minimize damage for our clients and to enable them to recover their normal business operations as quickly as possible following an event,” says Cannon. “And no, we don't offer rides on the shake table.”

The other main quake investigations done in the lab focus on ways to keep both water pipes (feeding sprinklers) and gas pipes (feeding potential fires) from rupturing when the earth moves. The research has led to special bracing techniques that FM Global can recommend, as well as suggestions for inexpensive but effective gas shut-off valves that can activate when a quake strikes (but won't get tripped when a truck rumbles by).

For flood perils, FM Global can consult on choosing locations to avoid sites in 100- or even 500-year flood zones. For properties already in flood plains, FM Global can recommend a relatively inexpensive preventive measure for floods in the 1- to 3-foot range: Flood Planks from PS Doors. These are lightweight aluminum panels with rubber gaskets that can be placed in front of openings as wide as loading docks.

“At a client [facility] of ours in Massachusetts during a flood last year, it took two guys [only] two hours to protect 40 openings,” Cannon recalls.

But the main attraction of the natural-hazards lab is a cannon that fires a 2×4-inch piece of lumber at 37 mph, simulating a tree branch hurled about during a hurricane.

The point of this dramatic presentation is simple: In the first test, the wood shot out of the cannon goes barreling right through a single half-inch piece of plywood covering a window. The message is clear: If that's all that is protecting a facility, rain would soon be pouring in.

But the wooden missile fired in the second test at the same speed bounces harmlessly off a doubled-up pair of half-inch plywood pieces. The lesson: Don't be penny-wise but pound-foolish when it comes to plywood.

The natural-hazards lab also fires rocks at windows and tests the wind-resistance capability of various roofing structures.

BIG BANG THEORY

While fires, flying 2x4s and quake simulators may seem hard to top, the best test is saved for last: the dust-explosion bunker.

In addition to such usual suspects as plastics and chemicals, even the dust of such simple foodstuffs as cocoa, flour and corn can pose a potentially explosive situation if ignited under the right conditions.

One way FM Global arrives at solutions for this peril is to put equipment intended to enclose sparks through a brutal regime of stress tests, exposing components to extreme levels of heat, humidity and corrosive gases to make sure they can function under the most dangerous of conditions (including temperatures of minus-80-degrees Celsius, reached in a cryogenic chamber).

But the carrier also conducts tests for when dust does ignite: In a corner of its wooded campus, it has built a five-sided concrete cube; the sixth side is covered with a tarp. During NU's visit, the chamber was filled with just a small amount of a plastic dust (phenolic resin).

On the count of three, a bottle-rocket-like device was set off inside, and then—bam! A giant fireball erupted through the tarp. The lesson taught here is that damage-limiting construction, such as a blowout wall (or panel) that can effectively channel the destructive energy in the least-harmful direction, can save equipment worth millions of dollars or a facility worth tends of millions.

Witnessing an awe-inspiring fireball—and one deployed in a good cause? A great way to end the visit to a campus that proves some careers in the insurance sector offer excitement more on par with a real jockey than a desk jockey.