Total accident costs can be compared to an iceberg. The part of the iceberg that can be seen above the surface is like the smaller, direct portion of the total accident costs.
A series of costly accidents can reduce profits radically. Accidents have obvious, direct costs such as medical, hospital, and rehabilitation expenses; workers’ compensation payments; and, in the case of repeating and serious accidents, higher insurance premiums or even loss of insurability.
But, accidents have less obvious, indirect costs that are usually uninsured. People often try to minimize the costs of accidents by saying they are covered by insurance. Insurance, however, covers only a portion of the total accident cost. Moreover, as accident losses increase, so may a company’s insurance premiums. It is clear that, directly and indirectly, accidents reduce profitability. The indirect costs of an accident are underestimated, like the size of the iceberg beneath the water’s surface.
For example, if the injured person misses work for only a short time, you may be able to make up for the production loss by having the rest of the department work overtime. Overtime wages paid are included as total accident costs. If the injured employee is gone for months, you may have to hire and train a replacement worker. Typically, new employees are less efficient until they are fully trained. Damaged machinery may also reduce productivity as you must make do with alternative equipment while replacements or repairs are complete. All this reduced efficiency represents another indirect cost.
The indirect costs of accidents are usually greater than the direct costs. In a conservative
estimate of losses, there is $3 of indirect costs for every $1 of direct accident costs. Some studies indicate the hidden costs can be up to ten times the insured costs.
Like an iceberg, the hidden costs of accidents are not visible on the surface, but are still
present. Examples of such hidden costs:
• Production loss/worker distraction
• Training costs/replacement worker
• Loss of skill/efficiency which slows production
• Paperwork and administrative time
Just as there are many hidden costs due to accidents, there are hidden savings in
accident prevention. This is where Clark-Mortenson can really help our clients. For this reason, the phrase “loss control” is often used in safety management.
Every accident you prevent saves direct and indirect accident costs, directly impacting your bottom line.
We provide tools and advice to reduce or mitigate your exposure to worksite accidents. Most importantly, we can help you improve your operating expenses and bottom line.
Examples include:
• OSHA training
• OSHALogs: your personalized app to
simplify the electronic submission process
• Workers Comp First Report of loss through
your personalized app to simplify the
electronic submission process
• Tools to allow you to cut down on training
cost and administrative time
• Wellness plans and personalized app for a
safer workplace
• Review of your workers’ compensation claims to determine future trends and how to
prevent increased insurance costs
• An inexhaustible library for your company’s
personal use including topics like: safety ideas, loss prevention, cost reduction, and employee wellness
• Proven ideas to increase employee morale
and retention
• And much more…
Please contact us today at 877-352-2121 for a no-obligation review of how we can help you improve your bottom line.
Sources: osha.gov and cdc.gov/niosh
NOTICE: This article may make reference to the Occupational Safety and Health Administration (OSHA) regulations; however, the guide is not legal advice as to compliance with OSHA or other safety laws, codes, or regulations. Compliance with OSHA and other safety laws codes or regulations, and maintaining a safe work environment for your employees remains your responsibility.
