A Risk Manager who Prefers To 'Surf Naked'

Earthquake coverage "burns money like you wouldn't believe," says Rocky Armfield, the Los Angeles County risk manager.

With that in mind, is it any wonder that L.A. County, like almost every other public entity in Southern California when it comes to prohibitively expensive earthquake insurance, prefers to "surf naked" for the most part--in other words, goes without any earthquake coverage?

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It's for "the most part" because L.A. County does carry $400 million in earthquake coverage for the county's emergency response center and other primary government functions that have to be up and running immediately should any earthquakes occur.

L.A. County, with an estimated $2.4 billion in workers' compensation losses on more than 25,000 open claims, also prefers to self-insure for that risk.

But the county does buy $12.6 million worth of property insurance annually for 25 buildings, including the 21,000-inmate, $350 million Los Angeles County Jail; the Los Angeles County Hospital + University of Southern California Medical Center; and much of the $3 billion property exposure of its extensive fine-arts holdings in the Los Angeles County Museum of Art.

The county's overall cost of insurance, including cover for vehicle and general liability and medical malpractice, as well as legal expenses and claims administration, was $358,391,666 in fiscal 2005-2006.

January 1, 2008

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