Understanding the True Cost of Occupational Injuries
While work-related injuries have declined, workplace accidents still occur and can cost employers thousands of dollars in direct and indirect costs. The National Safety Council (NSC) data reveals that the total cost of work-related injuries was $ 171 billion in 2019. The average cost per worker was $1,100, the average cost of medically consulted injuries (injuries serious enough that they warranted a consultation with a medical professional) was $ 42,000, and the cost per death was $1,220,000.
Average Cost of Accidents in the Workplace
The NSC has calculated above-average costs for workplace injury payouts by nature of the injury, injured body part, and cause of injury. Here are some of their findings:
Nature of Injury
- Amputation – $113,695
- Crush, fracture, or dislocation – $59,749
- Other trauma – $59,298
- Burns – $53,416
Injured Body Part
- The central nervous system or head – $89,347
- Multiple body parts – $71,437
- Pelvis, thigh, and hip – $60,082
- Leg – $59,683
- Neck -$58,507
- Arm or shoulder – $47,827
- Chest or other organs – $ 42,598
Cause of Injury
- Motor vehicle crashes – $ 81,971
- Burns – $ 58,284
- Slips and falls – $ 47,681
What Is the Average Cost of Workers’ Compensation Insurance?
The cost of Workers’ Comp insurance varies greatly based on factors such as:
- Industry – some industries have higher risk profiles (e.g. construction) than others, often translating into higher costs for their associated class codes.
- Payroll – generally the larger the payroll, the greater the cost of Workers’ Comp coverage
- Claims history – high claims frequency and costs often reflect safety, operational and many times management issues which all impacts the premium costs
- State laws – each state has their own regulations regarding Workers’ Comp, which may affect the cost of insurance
Direct Vs. Indirect Workers’ Compensation Cost
The direct Workers’ Compensation costs are usually claims and their associated costs that are handled by the employers’ insurance carrier and/or the employer themselves. According to data from the National Council on Compensation Insurance (NCCI), the average cost for Workers’ Comp claim was $42,008 in 2019.
Indirect costs are the long-term expenses emanating from workplace injuries. These include:
- Wages lost during disruptions caused by an injury. Disruptions occur during time spent on assessing the injured workers and working conditions at the time of the accident.
- Recovery of lost productivity, that is, hiring and training temporary workers, diminished productivity and quality, overtime costs, and more
- Additional human resources such as medical advisors, legal counsel, third-party consultants, and others
- Administrative time spent on researching and processing the Workers’ Comp claim
- Increases in the cost of Workers’ Comp coverage
- OSHA enforcement actions and fines
A study conducted by Harvard University and the Liberty Mutual Research Institute for Safety revealed that for every one dollar that spent on direct Workers’ Compensation costs, about $2.12 goes to indirect costs. The study also revealed that every dollar invested in workplace safety generates an ROI of $4.41 in terms of safety improvement.
Work-related Injuries Impact Productivity
A business’ productivity and profitability diminish even if only one employee misses work due to a work-related injury. The hours lost, as well as the cost of finding and training a replacement, are some of the factors that increase the indirect costs.
Cost Control for Workplace Employee Injuries
To control the cost of workplace injuries, an effective workplace safety program can help. A Company’s safety program should include employee safety training, proper property maintenance, safety rules, PPE, the provision of safe equipment, and an accident investigation process in the event an accident/injury occurs. Moreover, employee injuries must be effectively managed, including a comprehensive Return to Work Program, to minimize the total cost of workplace accidents. Close collaboration between the employer and their insurer will ensure the costs of workplace injuries are well controlled.