Indirect Cost of Workplace Injuries

In addition to the actual dollars paid out in claims and premiums to provide workers’
compensation insurance coverage, there are various Indirect Cost associated with injuries
and injury management. It is estimated that indirect cost usually approach 4 times the cost
of an injury. So, if a particular accident cost $10,000 to provide medical care and lost
wages -the estimated indirect cost is $40,000 in ‘other’ cost to the company.
Indirect cost defined- the cost associated with injuries other than the claim dollars spent.
Often these costs are “hidden” in the form of non-productive activity.
Types of Indirect Cost:
1) Managers time dealing with the claim; filling out claim forms, doing
accident investigations, dealing with adjusters, speaking with doctors,
nurses, and the injured worker, etc.
2) Lost productivity of the injured worker- the injured worker was (usually)
more productive than a new hire may be because they have been trained
to do their particular job and have experience at that job. Also, production efficiency is
lost as injured workers may not return at 100% duty after the injury.
3) Loss of product due to contamination of blood, hair, spillage, etc.
4) Loss of use of equipment due to pending investigation.
5) Loss of time due to OSHA investigations and possible citations and fines.
6) Time needed to hire and train replacement workers until injured workers can return to
work.
7) Delays in delivery due to changes in production schedules.
Indirect cost, while “hidden”, drive up the ‘cost’ of a claim, affect morale of the staff and
do not serve to increase revenue nor reduce expenses. So, while not readily visible, hidden
cost negatively affect the bottom line. Therefore, the prevention of workplace injuries has
a direct and positive impact on the bottom which is due to the none existence of the above
issues.