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

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Presentation on theme: "Direct and Indirect Accidents Costs Presented by QBE Loss Control Services."— Presentation transcript:

1 Direct and Indirect Accidents Costs Presented by QBE 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 Indirect Costs Like This Iceberg, Hidden Costs Of Accidents Are Not Visible On The Surface, But Are There Just The Same!

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 2 to 20 Times 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 1% 2% 3% 4% 5% $1000 $5,000 $10,000 $25,000 Profit Margin Accident Cost

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