APPENDIX 2

THE COSTS OF ACCIDENTS AND ILL-HEALTH (DRAFT 2)

Because too many people are still dying, being injured or made ill at work, the Government and Health and Safety Commission have launched the Revitalising Health and Safety Initiative.
One key reason why you should try and cut down on work accidents and ill-health cases is because they cost you money. Most people do not know how much, and this leaflet gives you some information about this. It also shows you a way of reckoning up these costs.

Do accidents and ill health really cost me money?

Do you agree with the following?:

• We only get cuts and bruise type accidents. All they cost us is a price of a plaster;
• No one has been hurt in our firm for years. OK, we get production problems because of break downs, but they are not accidents;
• Accidents don't cost me anything - that is what insurance is for!

If this is what you think then you may not realise how much day-to-day accidents are costing your business.

Think of an accident as any unplanned event which causes injury or ill-health or damage to equipment, property or product.

Visitors can be affected as well as employees.

Near misses can cost you money where there was actual damage and you should think particularly about those cases where some-one could have been hurt. A car crash is a key every day example, which can prove to be expensive. A case from a recent HSE study cost a town council £3.5K.

This leaflet is mostly about those cases where people are actually hurt or made ill and near misses where they could have been.

So how much do accidents actually cost?

Apart from the pain and suffering it is well known that large scale accidents can cost £ millions. But have you ever thought that minor injuries may cost more than you think - and of course there are many more of these.

The pattern of accidents has been described as being like a pyramid. There are relatively few serious accidents but many more minor ones.



When a minor injury happens, the real cost is more than just the plaster. Think about the person being away from the job. What about the time of the first aider? What about time lost if they have to go to their doctor or to the hospital?

Examples

In one study carried out for HSE an engineering company employing 60 people had six minor injury accidents over a month, at an average cost of £40. If this pattern were repeated this adds up to £2880 a year.

If injuries result in time off work, the costs can be higher. In another case a worker in a small plastics manufacturer injured his foot when a set of shelves fell over. This cost the firm £400.

In another firm an employee was off work with a back injury from lifting a heavy bale. When they added up sick pay, having to get someone else to do the job and shift production around, the cost came to £550.

In a recent case from a major civil engineering project an operator stood on a tunnel boring machine walkway to view material being excavated. He trapped his hand between the conveyor structure and gantry when it moved. The cost of this accident for the firm came out at £9300.

How much accidents will cost you in a year depends on how many people work for you and what sort of work you do. What are your raw materials, products or services worth? But you might be shocked to see how it all adds up.

Look at the table below which shows some firms with average accident records.

Most firms cannot afford this. As an example, in the case of the transport company the cost added up to about a third of their annual profits.

A serious accident could even mean a firm having to close down. And there are some other things which are not easy to cost. Think about your company's good name. What about losing business? A serious accident can shake people up. They will be upset and not able to concentrate as well.

Of course making improvements can cost money, but if an accident is prevented, this could be less that the cost of a key person being away from work through injury or ill health.

But what about insurance?

Most employers must have insurance cover for injuries and ill health to their employees. You will also have insurance for accidents involving vehicles. You may also have third party and buildings insurance.

But, insurance policies do not cover everything. It may just pay for serious injuries or damage.

Look at this list. Most insurance policies do not cover these things. Also, remember the excess which you have to pay anyway.

• Sick pay;
• Damage or loss of product and raw materials;
• Repairs to plant and equipment;
• Overtime working and temporary labour;
• Production delays;
• Investigation time; and
• Fines.

Uninsured costs can be more than those covered by insurance. Think of accident costs as an iceberg (add picture) with most of the losses uninsured and hidden below the water line. The average uninsured cost of an accident can vary widely. One recent study by Norwich Union Risk Services gave the following figures:

• Lost time/reportable £2097
• No lost time injuries £ 33
• Damage only £ 141

They estimate that the average such cost per employee per year in smaller firms adds up to £315.

As a rough guide, HSE has found that, on average, the cost of uninsured losses was 10 times more than the cost of premiums paid in the same period.

How can I work out my own costs?

The '10 times' figure is a good place to start to think about your own costs. If you want a better idea you could do your own study. It is not that difficult but you need to make sure you do not miss anything out. Here are some tips:

• Remember an accident can cause damage to equipment as well as to people;
• Remember the hidden costs such as cleaning up or having to replan production;
• Think about any changes that have to be made to machinery, safety devices or procedures following an accident;
• Put down the facts, together with the costs, as soon as possible after accidents happen. Other bills such as those for repairs or extra people may come in later. Add these in as you can.
• Finally, get your employees to report every accident, as the more you can record the better picture you get. Make sure to tell them that they will not get into trouble for doing this.

Help

Here is a table you can use as a reckoner. It lists all the main things that can arise from an accident.

Insert table here.

If you do this over a period you will begin to build up a picture of how much different kinds of accident cost.

Preventing accidents and ill-health

You can cut down on the costs by preventing accidents or cases of ill-health at work. The way to do this is by managing health and safety better.

If you need more help a good place to start is by using the booklet Essentials of H&S at Work. This is written as a practical, basic guide to help both prevent accidents and comply with the law. It has many other references on particular areas of H&S.

You can also use HSE's website and Infoline.