A total of 4,836 workers died from an occupational injury in 2015. Also, there were a shocking 1,153,490 nonfatal occupational injuries and illnesses involving days away from work.
Workers’ compensation insurance pays for occupational injury and illness which is why companies buy the insurance. Often, it is an employer’s single most expensive line of coverage.
Nationwide, the average direct cost of an injury is around $38,000.00. The indirect cost is four times higher. This means that an average United States workplace injury can be estimated to cost $190,000.00 per person.
The average construction slip-and-fall is $58,869.00. By doing the math, this represents $235,476.00 in indirect costs, for a grand total of $294,345.00. Three hundred thousand dollars could bankrupt a small business, which is why workers’ compensation insurance is so expensive. If a company averages a 10% profit margin, it would have to generate an additional $2,943,450.00 to cover the cost!
Insurance companies base their premiums on statistics and the law of averages. Insurance premiums will also be affected by the number of accidents a company has. For example, let’s say that the premium for a workers’ compensation policy is $100,000.00.
Imagine now that there is an accident paying out in direct cost $50,000.00. The premium will go up by $24,000.00, raising the rate to $124,000.00. This premium increase will remain for three years. In other words, this $50,000.00 claim will ultimately end up costing a company $72,000.00 in additional insurance premiums. It is also estimated that indirect cost can often represent four times the direct cost. (A future article will explain the difference between direct and indirect cost.)
The number of injuries occurring among the Hispanic population is severely disproportionate to its size. According to The National Safety Council, companies that participate in voluntary safety programs decrease claims by 52 percent. The average claim amount also decreases by 80 percent. Why? Because in addition to reducing the number of injuries, the injuries that do take place are generally less severe.
Factor in that the latest statistics show that Latinos make up 30% of the construction workforce and have the highest percent of injuries. Training in Spanish should not be overlooked.
As you can see, it makes financial sense to reduce injuries in the work place. But not only that, it’s also the right thing to do.