The Cost of Accidents at WorkNick HigginsonHealth & Safety Advisor

Why Prevent Accidents?HumaneLegalEconomic

HumanePrevent suffering and maintain quality of lifeNo-one should be expected to risk life and limb in return for a contract of employment

LegalHealth & Safety at Work Act 1974Variety of other Acts and RegulationsFailures can lead to:Enforcement noticesProsecutionCivil actions for compensation

Is good health & safety good business?

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

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.

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

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

Accident Costs IcebergUninsured CostsInsurance Costs

Insurance CostsEmployers LiabilityPublic LiabilityProduct LiabilityMotor Vehicle

Uninsured CostsProduct and material damageLost production timeLegal costsOvertime & temporary labourInvestigation time/AdministrationSupervisors timeFinesLoss of expertise/experienceLoss of moraleBad publicity

Piper Alpha167 deadEstimated cost of over 2 billion

GrangemouthBP refinery fire in 1987One person diedCost 50 million in property damageCost further 50 million due to business interruption

HSE ExampleSmall engineering firm (15 workers)Workers sleeve caught on rotating drillBoth bones in lower arm broken12 days in hospitalOff work for 3 monthsAdmin duties for 5 monthsUnable to operate machinery for 8 monthsManaging Director Prosecuted2 employees made redundant to prevent company going out of business

Costs to CompanyWages 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=100008000300070004000300040006000Total cost to business = 45000

HS(G)96Cost of AccidentsHSE Research5 Case Studies:Construction SiteCreameryTransport CompanyOil PlatformNHS Hospital

Construction SiteConstruction of Supermarket12 month projectTotal losses of 700,000Equates to 8.5% of tender priceInsured to Uninsured = 1:11

CreameryManufacture of dairy products340 staffTotal annual costs 975,336Equates to 1.4% of total operating costsInsurance to Uninsured = 1:36

Transport CompanyFleet of tankers80 employees65 vehiclesTotal annual loss 48,928Equates to 37% of annual profitsInsurance to Uninsured = 1:8

Oil PlatformNorth Sea100 staff on platformTotal annual loss 3,763,684Equivalent of shutting down the platform one day a weekInsurance to Uninsured = 1:11

Accident Costs Calculator

See Handout