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
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
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
Profit Margin
1% % % % %
$1000
$5,000
$10,000
$25,000
Accident Cost