The Soft Costs of Injuries

1. The Soft Costs of Injuries Presented By: John S. Hillard, CSP Risk Control Consultant jhillard@murrayins.com 717-606-5904

2. Soft Costs of Injuries What is a “Soft Cost”? 1.) Also known as indirect costs 2.) Costs that are difficult to quantify 3.) Often the answer to ‘Where did that money go?’

3. Examples Examples of Soft Costs: • Production related costs • Work force related • Management efficiency • Insurability • Internal/External corporate image

4. Production Related Costs Costs following an injury related to: • Decrease in productivity or quality • Loss of income sources • Repair and replacement of equipment

5. Production Related Costs Gossip about the incident during shift Customers lost due to inability to fill orders on time Equipment or areas shut down for investigation Product destroyed in loss, failure to fulfill order Orders shipped to customers late $

6. Workforce Related Costs Costs following an injury related to: • Payment of additional hours or overtime hours • Loss of experienced and skilled workers • Secondary losses due to shock or psychological trauma

7. Workforce Related Costs Overtime pay required to temporarily cover injured worker’s job Employees work late that day to cover lost production More employees needed to replace a more efficient employee Unable to find replacement employees for that position Several employees miss a work day due the psychological impact $

8. Management Efficiency Costs following an injury related to: • Additional work for management staff • Unexpected work • Or duties above and beyond scope of normal job

9. Management Efficiency HR submits claim, follows up with adjuster, submits wages & communicates with employee regularly General manager must coordinate overtime and fill in for some tasks Several members of management and supervisors are deposed and required to testify in court Supervisor takes injured worker to doctor or hospital Manager completed a first aid injury report $

10. Insurability Costs following an injury related to: • Insurance recommendations or investigation • Loss in desirability due to frequency or severity • Loss of competition

11. Insurability Current carrier not willing to offer a renewal Handful of carriers desire to write the account Loss control rep requires immediate correction rather than correction over time Increase in MOD factor State-fund or excess market $

12. Internal/External corporate image Costs following an injury related to: • Repairing image with public, customers or employees • Loss due to corporate image • Loss of competition

13. Internal/External corporate image Customers avoid doing business because you have a “certain reputation” Industry as a whole develops a reputation leading to broad stereotyping Current employees look for a new place to work Employees feel as though their safety isn’t important Prospective employees don’t feel you provide a safe work environment $

14. Best Practices PREVENT INJURIES! • If we don’t have losses we don’t have hidden costs • Invest up front to prevent losses • Look for and investigate near miss accidents • Develop and hire employees that value safety • Participate in the OSHA/AMI alliance!

15. Best Practices Use good claim management practices: • Offer return-to-work to injured workers • Keep communication open with ALL injured workers • Report claims early • Communicate with insurance carrier and agent

16. Conclusion Conclusion • Losses that don’t happen are cheap! • Soft costs are hard to anticipate and quantify • An ounce of prevention is worth a pound of cure

17. Thank You!