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Chief Underwriting Officer, North America Property Insurance, AXA XL

“An ounce of prevention is worth a pound of cure,” Benjamin Franklin famously wrote.  Mr. Franklin believed in taking precautions.  His early fire protection advocacy paved the way for what would become a critical component in insuring and protecting properties around the world – risk engineering.   

Risk engineering has evolved considerably over the last century.  What was once a discipline focused on fire protection has evolved in a broad-focused and collaborative approach focused on finding ways to protecting property against damage from a wide variety of risks and natural forces including high winds, excessive water and earthquakes.   

This year, XL’s global risk engineering team, also known as XL Global Asset Protection Services or XL GAPS is marking a very special milestone – its 125th anniversary of risk engineering.  Over the last century and a quarter, this team has evolved –different names, different owners, and different leadership.  What hasn’t changed, however, is this team’s dedication to helping commercial is and industrial businesses reinforce their property protection efforts.  And it’s been an interesting journey. 

Highly Protected Properties

In 1822, a mill owner in North Providence, Rhode Island took special considerations when construction his factory.  He used brick for his building’s walls and extra-thick wooden planks for floors; and he set his roof shingles in mortar. His intent was to increase his mill’s resistance to fire. He also installed a fire protection system – a primitive, yet functional, system that consisted of a network of piping, hydrants and fire hose connections connected to a fire protection water supply.

Once his mill was completed, he asked his fire insurance company for a reduction in rate because of what he had done to reduce the probability that his mill would sustain a major fire loss.  His request was denied however.  After that rejection, he took it upon himself to study fire insurance and, eliciting the participation of other manufacturing companies in Rhode Island, started an insurance organization of their own, a mutual fire insurance organization.  Its creation represented two milestones in the insurance industry.  First, it was the first insurance company to focus its efforts on what were to become known as well protected properties, known as highly protected risk (HPR). Second, it focused on the prevention of losses and the study of loss prevention techniques.

At the end of the first year of operation, the members of Manufacturers' Mutual found that they had saved 63% of their former fire insurance costs.  As word of the success of these manufacturers mutual insurance companies spread through the industrial community, other mutual fire insurance organizations were started.   

Here’s where we come in

By the late 1800's, the capital stock insurance industry found it difficult to compete in the industrial insurance market because of the preferred rates offered by these mutual insurance companies to the best risks. To compete, a group of 11 of the larger stock fire insurance companies got together in 1890 and formed a fire insurance organization of their own, calling it Factory Insurance Association (FIA).  FIA’s major market was in the Eastern United States especially the Northeast where factories of various types sprung up during the Industrial Revolution.

To ensure that any new business met the established criteria, the FIA inspection or engineering department was responsible for inspecting or surveying properties as prospects (potential customers) for FIA coverage. At the same time, they conducted periodic inspections of FIA insureds to make sure a required level of protection was maintained or improved.  The inspection department was the eyes and ears of the FIA. Visiting each facility, making a thorough inspection of each facility to see and hear what was happening, and providing written reports of their findings to the underwriters, the FIA Field Inspectors or Field Engineers provided the underwriters with the information needed to make sound business decisions.

A lot has happened since 1890. The FIA became Industrial Risk Insurers in 1975 and then ultimately become XL GAPS, when the operation was purchase by XL Group in 2007.   What hasn’t changed is that risk engineering plays an increasingly important role in helping protect commercial and industrial properties, the people that work in them and the reputations of the companies that operate them.   If Ben Franklin were alive today, he would see that fire prevention he advocated has expanded exponentially and today, “an ounce of prevention” is helping prevent more than a “pound of cure.”  It’s preventing multi-million dollar losses. 



NFPA logo


In 1895, when the Factory Mutuals and the FIA mandated the use of automatic sprinkler systems, problems arose. The Factory Mutuals had published criteria detailing their requirements for the installation of automatic sprinklers. The capital stock companies like FIA had no such standards. To resolve this situation, representatives of the FIA, the WFIA and several capital stock fire insurance companies assembled in Boston in 1895 to begin work on a set of standard sprinkler rules. This meeting led to the creation of the National Fire Protection Association (NFPA) in 1896. NFPA later published the first consensus standard on automatic sprinkler systems—the first of several hundred NFPA standards available today.



the great Depression


In October 1929, the US stock market crashed. Factories of all kinds closed, creating labor unrest, and increasing the threat of arson. A major concern to the FIA was that adequate levels of protection were maintained in idle facilities. FIA inspectors inspected facilities monthly, and advised plant management on methods to protect idle and strikebound plants against fire. Despite the Great Depression, the FIA continued to grow.



nuclear symbol

THE 1950’S

As America made the transition to peacetime, unemployment was virtually eliminated, and the production of new and improved goods quickened. Companies began to build on the technologies developed during the war, producing innovations such as radar, microwave transmission, jet planes, chemicals, penicillin, and electronics. Even houses were mass produced using techniques unknown before the war. New manufacturing facilities increased insurable values while new processes multiplied productivity. The expansion of American business into international markets gathered momentum. The military demand for super-sophisticated weapons spawned high technology industries, including the construction of nuclear submarines. Nuclear power was also being used for the production of commercial electricity. During this same period, the FIA was selected to manage the operations of the Nuclear Energy Property Insurance Association (NEPIA).  During this time FIA developed a "hot work permit system" and specified minimum requirements to be followed for cutting and welding and hot work operations. Under the system, no cutting or welding operations would be done without a permit and no permit would be issued before suitable precautions were taken against fire.



flag of eu union

THE 1960’S

In 1958, the formation of the European Common Market encouraged an overseas boom by American Business that continued into the 1960s. This boom involved much more than just expanded trade. It involved the creation of "multinational" corporations. More and more companies produced goods abroad outside the United States. At home, America's gross national product increased by nearly 50%. Franchising, retailing, and merchandising grew at a frantic pace. In 1964, because of the pressures of the property insurance market, FIA combined its efforts with some of its member companies to produce combined insurance policies covering both "fire and boiler/ machinery" perils.




THE 1970’S

The 1970’s brought several economic recessions and recoveries. Despite seesaw economic conditions, the FIA enjoyed enormous growth. Gross written premium increased 115%, and worldwide insurance in force soared to nearly $500 billion. While international underwriting opportunities expanded, domestic disasters — natural and manmade — seemed to multiply. There were hurricanes, tornadoes, and snow overloads. Several major losses resulted from impaired fire protection systems, operator error, and arson. Energy shortages were a continual threat to the maintenance of adequate fire protection. Throughout this period, the FIA's selective underwriting practices and experienced engineering counsel brought stability to an unsettled marketplace. In 1975, the FIA and the Oil Insurance Association (OIA) merged to become Industrial Risk Insurers. The consolidation provided customers with a broader base of operations, greater underwriting experience, expanded engineering services, increased capacity, and enhanced financial stability.



XL Gaps 125 years


In 2007, XL Group purchased GAPS from Swiss Re, to develop XL’s internal risk engineering capabilities known as XL GAPS.  In the tradition of FIA and IRI, XL GAPS and its160 risk engineers now located in 18 countries, continue worked with NFPA and other industry organizations to improve safety standards. As a result, XL GAPS have amassed a deep understanding of fire prevention and other safety standards and regulation and the most diversified field staff in the world.

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Global Asset Protection Services, LLC, and its affiliates (“AXA XL Risk Consulting”) provides risk assessment reports and other loss prevention services, as requested. This document shall not be construed as indicating the existence or availability under any policy of coverage for any particular type of loss or damage. AXA XL Risk. We specifically disclaim any warranty or representation that compliance with any advice or recommendation in any publication will make a facility or operation safe or healthful, or put it in compliance with any standard, code, law, rule or regulation. Save where expressly agreed in writing, AXA XL Risk Consulting and its related and affiliated companies disclaim all liability for loss or damage suffered by any party arising out of or in connection with this publication, including indirect or consequential loss or damage, howsoever arising. Any party who chooses to rely in any way on the contents of this document does so at their own risk.

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