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New Study Reveals Financial Burden Of Workplace Injuries Growing Faster Than Inflation

Employee injuries cost U.S. businesses nearly $1 billion per week

While American workplaces are becoming safer, the cost of on-the-job injuries continues to rise, according to the findings of the latest Liberty Mutual Workplace Safety Index. In developing the Index, researchers apply Liberty Mutual 2001 workers’ compensation claims cost to the workplace injury frequency information reported by the federal Bureau of Labor Statistics for injuries occurring that year. To provide a broader perspective, the relative proportions of each injury type are applied to the national estimates of the cost of workers’ compensation benefits from the National Academy of Social Insurance, which includes information from a broad range of workers’ compensation insurance providers.

“Managing the significant and growing cost of workplace injuries is a critical challenge facing all companies, regardless of size, industry and location,” notes Brian Melas, a senior vice president of commercial insurance at Liberty Mutual. “Improving workplace safety is key to managing this nearly $1 billion per week impact — prevent the injury, avoid the associated costs. For example, Hard Rock Café’s U.S. operation saved almost $400,000 in 2001 and 2002 by reducing workplace injuries at a faster rate than the restaurant industry as a whole.”

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 — payments to injured employees and their medical care providers. The Safety Index can help companies focus their safety efforts by highlighting the causes of the most expensive workplace injuries.

Findings - Cost Going Up, Number Of Accidents Coming Down

Significant findings from the latest Workplace Safety Index include:

• 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% between 1998 and 2001, or 4% after adjusting for inflation in medical and wage benefits.
  
  
• The top 10 causes of workplace injures in 2001 were:

• The top three injury causes (overexertion, falls on same level and bodily reaction):
  
  
  • Are the fastest growing of all injury causes, with the cost of each rising 10.7%, 17.2% and 13.7%, respectively, faster than inflation between 1998 and 2001.
    
    
  • Represent 50.1% of the total costs of serious workplace injuries in 2001, costing about $23 billion a year or $450 million a week.
    
    
• The frequency of serious work-related injuries fell 6% between 2000 and 2001, the largest single decline in the four years of the Workplace Safety Index. The number of injuries fell 1.3% between 1999 and 2000, and grew 0.2% between 1998 and 1999. There were fewer, but more expensive serious work-related injuries in 2001, one reason the total cost of injuries did not decline despite the 6% drop in frequency.

Impact — Protecting Workers Pays Off

“The latest Index findings tell employers to expand their efforts to address the fastest growing causes of work-related injuries — overexertion, falls on same level and bodily reaction,” notes Karl Jacobson, a senior vice president of loss prevention with Liberty Mutual. “This is where there is real potential to get at the benefits of a safer workplace — protecting employees and avoiding the financial impact of on-the-job injuries.”

The current Workplace Safety Index is based on data from 2001, the latest year for which data is available, and tracks performance since 1998.

More information on the latest Workplace Safety Index findings, tips on how employers can prevent the leading causes of workplace injuries, and case studies showing how companies improved safety and the benefits they received, is available at www.libertymutual.com. 

riskVue | The webzine for risk management professionals
March 2004