1997 RISK MANAGER OF THE YEAR: MULTIYEAR POLICY COVERS PROPERTY RISKS

FMR Corp. purchases nearly $3 billion of property insurance limits from Allendale Mutual Insurance Co. of Johnston, R.I.

Like much of the insurance purchased by the Boston-based company, known as Fidelity Investments, it is a multiyear program. The five-year program crafted by Judy Lindenmayer, vp-Fidelity insurance and risk management, ends in April 1998.

Sublimits under the policy include:

$100 million for flood and earthquake.

But, Fidelity does not purchase earthquake coverage for its California exposures.

"It is extremely expensive, and the amount of coverage I would get wouldn't replace a building. It wouldn't do us any good," Ms. Lindenmayer explained.

For example, by taking a $500,000 deductible and paying $80,000 in premiums, Fidelity could have purchased $5 million of primary earthquake coverage.

The company owns a square block in Walnut Creek. Fidelity also owns approximately 80 offices stretching from San Francisco to San Diego. "$5 million is nothing. Why pay for it?"

Additional limits were available if the primary insurer sought support from the facultative reinsurance market. "I try avoiding going into the facultative market," Ms. Lindenmayer explained. "It's too expensive."

$10 million of errors and omissions coverage that ensures a Fidelity property is covered even if its location is omitted from or erroneously labeled in the schedule of properties Fidelity owns.

$2.5 million of transit coverage, which covers property that is lost, damaged or destroyed during transit.

Fidelity also is covered for the loss of rental income and the replacement value of ocean cargo under the policy.

In addition, the insurance policy provides extra expense, business interruption and contingent business interruption coverage.