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Accident CostsPUBH 3310

December 3, 2012

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Supplemental Resources

Selected Internet websites, as noted in thispresentation

2

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Objectives

Understand why accident costs should bedetermined

Know cost categories Indirect, direct, intangible

Be familiar with accident cost estimatingmethods Forms (National Safety Council) Computer program (OSHA) Etc.

Understand the impact the cost of accidents have onsales Be able to calculate the increase in sales needed to

compensate for the losses caused by an accident

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Introduction

Motor Vehicle Accidents $722 billion

Workplace Accidents $48.5 billion

Home Accidents $18.2 billion

Public Accidents $12.5 billion

Workplace accidents cost nearly $50 billion each year:

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Liberty Mutual Insurance, 2011 Liberty Mutual Workplace Safety Index

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Liberty Mutual Insurance, 2011 Liberty Mutual Workplace Safety Index

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Introduction

Management needs to know accident costs Justify accident prevention activities Set priorities

"Direct costs" are easy to identify Insurance, medical costs, equipment damage, etc.

"Indirect costs" are often hidden Lost production, administration, etc.

1-2 x direct cost for major injuries, 4-5 x for minor "Intangible costs" are not usually considered Lost business, negative public relations, etc.

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Indirect Costs

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Youonly seethe tip of

theiceberg

Direct

Costs=====Indirect

Costs

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Accident Cost Categories

10 categories of uninsured costs* Includes direct and indirect costs

Wages for uninjured workers

Damaged material or equipment Wages for injured worker Overtime cost Supervisor wages for accident-related activity Wages lost due decreased productivity of

injured worker

Learning cost for new worker Uninsured medical cost Clerical and management cost Miscellaneous

*National Safety Council,Accident Prevention Manual, 11th Ed.

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Cost Estimating Tools

National Safety Council Department Supervisor's Accident Cost

Investigation Report

Used to determine lost wages and production Investigator's Cost Data Sheet Used to identify uninsured costs Includes the 10 cost categories

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Other Cost Estimating

Methods Determine cost of lost work

Use the average loaded labor rate (wages +benefits)

Employee hours lost x labor rate = cost

Get direct costs by studying company records Medical, insurance costs, property damage, fire

losses, etc.

Add 20% to the total for other indirect costs

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Impact of Accidents on

Profits and Sales A companys profit margin determines how

much sales must increase to recover lost

accident costs

njuryaccident/iforpaytorequiredsalesmarginProfit

costAccident

Example: $10,000 accident cost/0.04 profit margin = $250,000

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The Business Case for Safety and

Health OSHA $afety Pays Program

http://www.osha.gov/dcsp/smallbusiness/safetypays/index.html

Estimates the effect of accidents and injuries on profitability Based on actual insurance claim data

Other resources Making the Business Case for Safety and Health,

http://www.osha.gov/dcsp/products/topics/businesscase/index.html

http://www.osha.gov/dcsp/smallbusiness/safetypays/index.htmlhttp://www.osha.gov/dcsp/smallbusiness/safetypays/index.htmlhttp://www.osha.gov/dcsp/products/topics/businesscase/index.htmlhttp://www.osha.gov/dcsp/products/topics/businesscase/index.htmlhttp://www.osha.gov/dcsp/products/topics/businesscase/index.htmlhttp://www.osha.gov/dcsp/products/topics/businesscase/index.htmlhttp://www.osha.gov/dcsp/smallbusiness/safetypays/index.htmlhttp://www.osha.gov/dcsp/smallbusiness/safetypays/index.html