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It's a long way from Casper, Wyo., to Los Angeles. Sure, it's more than a thousand miles as the western raven flies, but the two places are even further apart in terms of their demographics.

Natrona County, where Casper is, has a population of about 65,000. Los Angeles County has a population of almost 10 million.

He's made the long trek to his present position as risk manager for Los Angeles County via boot leather, meaning that he has used his business sense, his insurance industry experience and his rooted sense of ethics to progress, the way he says a Western gentleman should.

In describing his professional style, Armfield says he stays away from the brash aggressiveness made infamous by such creatures as New York City cabdrivers and Philadelphia politicians. He instead uses the soft-spoken voice and direct eye contact favored by cowboys, the real ones anyway.

"I believe the Western approach is a little bit less immediately confrontational," explains Armfield, a 1972 Washington State graduate who earned his M.B.A. at the University of Utah and has held public risk management positions in Wyoming, Arizona and California.

His reputation reflects that cooler, Western approach.

"In more than 10 years, I never once saw Rocky raise his voice or lose his composure in a meeting," says Bill Hardy, the executive director of the Phoenix-based Arizona Counties Insurance Pool. Hardy worked with Armfield when Armfield was manager of public-entity pools in Arizona and Nevada.

ALL ABOUT THE APPROACH

Not that his quiet manner means that Armfield lacks gravitas. But he says it's how you handle the thorny stuff that's going to seal the business relationship or the political deal, and he says you better establish civil ground rules early on, much like the card games among armed strangers in the West of old.

"It's not being afraid to be very specific. Not being afraid to be very direct. But you are a gentleman when you approach the discussion. A large part of your success on the next issue is predicated on the relationship you build with this particular problem, how you approach it and how you leave it," says Armfield.

In keeping with his innate Western carriage, Armfield has but one lament. He's had to go it alone. Of course he's picked up tips over the years on the right and wrong way to do things. But it's really been from observation, not consultation.

"One of the biggest professional disappointments I have had is that I have never found a mentor that I could really lean on, a grizzled gray beard that I felt knew the ins and the outs of risk management," says Armfield.

But that's not the way that Western plot lines work anyway.

Armfield is now employing his understated style in the halls of power on Temple Street in downtown Los Angeles, a place that one public-entity risk manager who didn't want his name used described as the "Titanic" of high-powered county governmental politics.

And it seems like everyone who's been involved with it has a scar or two.

"Everything in Southern California is intense politically, are you kidding me?" says Richards Barger, the owner of Pasadena-based Minerva Insurance Services and a former member of Los Angeles County's risk management advisory committee.

In addition to its political drama, another challenging feature about L.A. County is that the place is big, very big. The county has 110,000 employees and a $21 billion budget.

But it's also a place that Armfield says had a surprisingly backward approach to risk management when he first arrived there in 2003.

For one, department heads weren't accustomed to issuing loss reports that would give the executive administrators or board of supervisors some idea of how to allocate their loss-prevention capital or controls. Armfield, an industry veteran who knew the importance of such things, encountered plenty of resistance when he started thumping the dusty book that held that scripture.

"They were deeply suspicious, some of them, about that process. They didn't want to be embarrassed, and they didn't understand the reason for it," says Armfield.

But Armfield says he took his time, stayed patient and laid out his case firmly but diplomatically.

"We said this is the start of the map, and this is where we're going to take it," recalls Armfield.

Nobody threw any punches and Armfield kept his job. Now the county, with the help of statewide workers' compensation reform, is starting to see results.

"He has proven with the numbers that he has turned the operation around," says Jesse Johnson, a diversity and economic development officer with the city of Long Beach and member of L.A. County's risk management advisory committee.

ROLL THOSE NUMBERS

In the county's annual chief administrative office risk management report for fiscal year 2006, L.A. County, which was facing runaway insurance costs in the early part of the decade, showed results that are worth noting.

Between 2004 and 2006, the county pared $1.28 billion, or 35 percent, of its estimated workers' comp losses outstanding.

The cost of insurance as a percentage of the county budget also declined. In fiscal 2003-2004, the county's cost of insurance was 2.4 percent of the county budget. In fiscal 2005-2006, the expenditure had been slashed to 2.05 percent.

Actual paid expenses for the county's workers' comp trust fund for 2005-2006 came in at $263 million, or $117 million less than the $380 million that was budgeted.

When Armfield took the risk management job in 2003, insurance expenses for the county, including self-insured workers' compensation losses, were approaching $300 million per year and growing at between 15 percent and 20 percent annually.

Armfield didn't need an abacus to figure out that the county's insurance costs could double in four years and eventually breach the $1 billion mark.

L.A. County's budget may be $21 billion, but two-thirds of that is really fixed. Only between $7 billion to $8 billion are funds that the county's board of supervisors can apply at its discretion. If the insurance costs weren't tackled, such things as libraries and museums would start to face closure or restricted hours.

"I didn't think it would be too long before some painful discussions had to occur," says Armfield.

The county's plight--and similar pain being felt by businesses and other public agencies in California--ended up leading to significant changes statewide.

Armfield and others in the public and private sectors were able to form an alliance to lobby Sacramento and produce changes in the workers' comp laws.

The reforms that have swept California since 2004 have led to much lower medical workers' comp expenditures for the state's municipalities and businesses.

Other changes are afoot. Armfield is working with the risk managers of the Los Angeles Unified School District and the Los Angeles Municipal Transit Authority to change the atmosphere for third-party claims. Leaders have agreed in principle to establish a minimum threshold for liability claims that could be filed by one entity against the other.

"We haven't figured out the right number yet, but there is some number," says Greg Kildare, the executive officer for risk management for LAMTA. Kildare says the agencies and the county want to arrive at an agreement rather than paying their attorneys to sue one another.

"The reason for that is the public is paying whether it is the county's money or my money. It is all the public dough, and we are all public agencies," Kildare says.

The three county agencies have also approached the city of Los Angeles about becoming a signatory to the agreement, but even if the city can't sign on, for whatever reason, Armfield and Kildare say they will move forward on it.

The agreement was developed with David Holmquist, the previous risk manager for the Los Angeles Unified School District.

With California having accomplished significant reforms, and work under way to create more cooperation among county agencies, Armfield says he is in possibly the best professional position in his life, despite some of the scorpions and sidewinders that menace some of the darker, cooler corners of the L.A. County administrative building.

"The position I am in is the best, most dynamic public-entity risk management function in the country, and I am blessed that I've got it," Armfield says.

DAN REYNOLDS is senior editor of Risk & Insurance®.

January 1, 2008

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