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Accident CostsPUBH 3310
December 3, 2012
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Supplemental Resources
Selected Internet websites, as noted in thispresentation
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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
