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Direct and Indirect Accidents Costs

Direct and Indirect Accidents Costs. Presented by QBE the Americas Loss Control Services. Why Evaluate Accident Costs. Reliable costs needed for decision making Estimation of cost savings from safety expenditures Dollar savings may be more meaningful to management than incident rates.

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Direct and Indirect Accidents Costs

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  1. Direct and Indirect Accidents Costs Presented by QBE the Americas Loss Control Services

  2. Why Evaluate Accident Costs • Reliable costs needed for decision making • Estimation of cost savings from safety expenditures • Dollar savings may be more meaningful to management than incident rates

  3. Direct Costs (Insured) • Definite and known costs -Worker’s compensation premium - Costs for repair/replacement of damaged equipment/materials

  4. Indirect Costs (Uninsured) • Other non-billable costs that result from internal systems adapting to the accident. Usually account for 70%-90% of the total true accident cost.

  5. Hidden Costs Of Accidents Direct Costs Like This Iceberg, Hidden Costs Of Accidents Are Not Visible On The Surface, But Are There Just The Same! Indirect Costs

  6. Indirect Costs • Wage of injured worker for part of day missed due to accident • Wage costs of other workers • Property damage not covered by insurance • Administrative costs • Litigation

  7. Loss of Productivity • Injured worker(s) • Malingering following injury • Damaged equipment • Damaged or lost product • Other employees time • Supervisors time • Rescheduling

  8. Loss of Productivity • Subcontracting • Decreased production while new employee is trained • Down time • Interviews/investigation • Cleanup after accident

  9. Training • Time • Development costs • Planned or unplanned

  10. Hiring Replacement • Interview • Orientation • Drug Test • Physical

  11. Morale-Consequences • Poor safety practices • Work slows down • Poor workmanship (quality) • Lack of respect for management

  12. Legal Costs • OSHA Fines • OSHA- Cost/Time to correct violations • Legal - Depositions - Information Searches - Attend court proceedings

  13. Human Resources • Insurance forms • Accident investigation • Medical management • Recordkeeping • Finding light-duty jobs

  14. Direct vs. Indirect Costs • Indirect Costs • Are from 2to 20Times • Direct Costs

  15. Did you Know? • Claims reported more than 3 days after injury can add: • 16% to Medical Costs • 38% to Indemnity Costs • Claims reported more than 12 days after injury can increase the likelihood of Attorney Representation by: • 67% for Medical Claims • 69% for Indemnity Claims

  16. Sales required to pay for an accident Profit Margin 1% 2% 3% 4% 5% $1000 $5,000 $10,000 $25,000 Accident Cost

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