The estimated costs of accidents vary, but it is generally agreed that accidents cost significantly more than the ‘direct’ costs. The HSE estimates that the average cost for a ‘lost time’ accident is approximately £2,097. This means that if your company’s net profit ratio is 10 percent, you will have to sell some £21,000 more product to cover the cost of each ‘lost time’ accident.
The HSE has a ready reckoner for the costs of accidents which may help you to identify the true costs to your company.
The ‘direct’ costs referred to above will generally include:
- wages costs for the period of absence;
- overtime or agency worker costs to meet production demands;
- repair/replacement costs for any damaged equipment;
- making the area safe; and
- costs of first aid and transporting the injured person(s) to home or hospital.
The ‘indirect’ costs can include:
- management time;
- legal fees;
- fines and court costs;
- insurance premium increases;
- compensation claims; and
- uninsured losses, including excesses on claims and loss of business.
The costs of preventing accidents, through the implementation of an effective safety management system (see health and safety management systems), may seem high, but they are likely to be far exceeded by the true costs of accidents that would probably occur if there were no health and safety management system in place.