Work Related Injuries Cost Businesses
Nearly $1 Billion Per Week

By Thomas W. Eynon

While the American workplace has become safer, the costs of on-the-job injuries continue to rise, according to the latest findings from the Liberty Mutual Workplace Safety Index, which found that workplace injuries cost U.S. businesses nearly $1 billion per week in direct costs. The new study reveals that the financial burden of workplace injuries is growing faster than inflation.

The Workplace Safety Index ranks the leading causes of serious on-the-job injuries, those resulting in an employee missing six or more days from work, based on direct costs, which include payments to injured employees and their medical care providers. The Safety Index can help companies focus their safety efforts on the causes of the most expensive workplace injuries.

Significant findings from the latest Workplace Safety Index include:

• The cost of accidents is going up while the number of accidents is coming down.
• The financial burden of serious work-related injuries and illnesses grew to $45.8 billion in 2001, from $44.2 billion in 2000.
• This cost grew 13.5 percent between 1998 and 2001, or 4 percent after adjusting for inflation in medical and wage benefits.

The top three injury causes—overexertion, falls on same level and bodily reaction—are the fastest growing of all injury causes, with the direct cost of each rising 10.7 percent, 17.2 percent and 13.7 percent respectively between 1998 and 2001. They also represent 50.1 percent of the total direct costs of serious workplace injuries in 2001, costing about $23 billion a year or $450 million a week, and this is just the tip of the iceberg.

Based on a recent survey, 56 percent of business executives from a range of geographic locations, company sizes and industries reported that businesses faced between $2 and $5 of indirect costs for each $1 of direct costs. As a result, the $23 billion a year of direct cost for just the top three injury causes produced $46 billion to $115 billion of indirect costs. As you can see, each injury's indirect cost is far larger than its direct costs, and these costs are totally absorbed by your company.

The findings from this latest index tell a sobering story about the costs associated with the fastest growing causes of work-related injuries: overexertion, falls on same level, and bodily reaction. In our industry, we have very limited statistical information to help us determine where we need to focus our limited safety resources. You may be focusing attention on certain causes of workplace injuries that are not resulting in your largest losses. There may be a need to realign your workplace priorities. How do you really know where your safety priorities should be?

You need to take a hard look at your accident history and Workers' Compensation cost experience to see where your losses are occurring. Then design a program to target those specific losses. If your analysis does not reveal losses in the top three index injury causes, you may want to conduct a risk assessment to determine the probability of such an occurrence and then expand your accident prevention efforts in these areas.

There is some real potential to better protect your employees by providing a safer workplace and at the same time avoid the financial impact of on-the-job injuries once you understand where your losses occur or have the potential of occurring.