The Cost of Accidents at Work

1. The Cost of Accidents at Work Nick Higginson Health & Safety Advisor

2. Why Prevent Accidents? • Humane • Legal • Economic

3. Humane • Prevent suffering and maintain quality of life • No-one should be expected to risk life and limb in return for a contract of employment

4. Legal • Health & Safety at Work Act 1974 • Variety of other Acts and Regulations • Failures can lead to: • Enforcement notices • Prosecution • Civil actions for compensation

5. Is good health & safety good business?

6. “We recognise the importance of costing loss events as part of total safety management. Good safety is good business” Dr. J Whiston, ICI Group SHE Manager

7. “Safety is, without doubt, the most crucial investment we can make, and the question is not what it costs us, but what it saves.” Robert McKee, Chairman Conoco (UK) Ltd.

8. “Prevention is not only better, but cheaper than cure…Profits and safety are not in competition. On the contrary, safety at work is good business.” Basil Butler, MD British Petroleum plc

9. “We saved £750,000 on insurance premiums through improving our systematic management of health and safety.” Birse Group plc

10. Accident Costs Iceberg Insurance Costs Uninsured Costs

11. Insurance Costs • Employers Liability • Public Liability • Product Liability • Motor Vehicle

12. Uninsured Costs • Product and material damage • Lost production time • Legal costs • Overtime & temporary labour • Investigation time/Administration • Supervisors time • Fines • Loss of expertise/experience • Loss of morale • Bad publicity

13. Piper Alpha • 167 dead • Estimated cost of over £2 billion

14. Grangemouth • BP refinery fire in 1987 • One person died • Cost £50 million in property damage • Cost further £50 million due to business interruption

15. HSE Example • Small engineering firm (15 workers) • Workers sleeve caught on rotating drill • Both bones in lower arm broken • 12 days in hospital • Off work for 3 months • Admin duties for 5 months • Unable to operate machinery for 8 months • Managing Director Prosecuted • 2 employees made redundant to prevent company going out of business

16. Costs to Company Wages for injured worker over period = Lost production/remedial work required = Overtime wages to cover lost production = Wages for replacement worker = Loss of time of manager/MD = Legal expenses = Fines and court costs = Increase in Insurance Premiums = £10000 £8000 £3000 £7000 £4000 £3000 £4000 £6000 Total cost to business = £45000

17. HS(G)96 • Cost of Accidents • HSE Research • 5 Case Studies: • Construction Site • Creamery • Transport Company • Oil Platform • NHS Hospital

18. Construction Site • Construction of Supermarket • 12 month project • Total losses of £700,000 • Equates to 8.5% of tender price • Insured to Uninsured = £1:£11

19. Creamery • Manufacture of dairy products • 340 staff • Total annual costs £975,336 • Equates to 1.4% of total operating costs • Insurance to Uninsured = £1:£36

20. Transport Company • Fleet of tankers • 80 employees • 65 vehicles • Total annual loss £48,928 • Equates to 37% of annual profits • Insurance to Uninsured = £1:£8

21. Oil Platform • North Sea • 100 staff on platform • Total annual loss £3,763,684 • Equivalent of shutting down the platform one day a week • Insurance to Uninsured = £1:£11

22. Accident Costs Calculator See Handout