Safety Programs Save Big Bucks!
An effective safety program can help prevent injuries, reduce costs, and make a substantial contribution to your bottom line. The most effective safety program is one that is fully integrated into the way your company conducts its business. A quality Safety Program focuses on the systems and processes that have the greatest potential to cause injury.
Every time an injury occurs that involves a claim being filed with Workers’ Compensation, a Company’s Experience Modifier (EMR) increases. A company with an effective safety program in place will have fewer accidents and injuries, which ultimately translates into lower net insurance costs through lower direct claims costs. This is illustrated by the following example:
Note: Other debits may apply for lack of a safety program, which fails to abate hazards and control accidents, further increasing total premium.
Note: Other credits may apply for a good safety program, which controls hazards and reduces accidents, further reducing total premium.
Similar to the invisible portion of an iceberg, there are a number of indirect costs associated with accidents that are not as easily seen. These indirect costs have been estimated to be from five to 50 times the size of the direct costs! An effective safety program will mean less money is spent on things such as repairing damaged equipment, lost time to fill out accident reports, time / money spent on hiring and training replacement personnel and lost productivity / quality because less experienced employees replace key injured employees.
Furthermore, few employers understand the additional sales and productivity efforts required to make up for lost profits associated with accidents. The two following examples show how a company can calculate the revenues needed to maintain profit margins and cover the cost of accidents.
1. Using premium to calculate needed sales:
Loss vs. Cost
• Cost of Insurance divided by % Profit Margin = Amount of Sales Needed to Pay for the Claims
2. Using injury cost to calculate needed sales:
