Workplace Safety Pays, Survey Shows

Loss control pays, as sixty-one percent of risk managementexecutives claim a savings of $3 or more for every $1 invested inworkplace safety, a survey by Liberty Mutual has found.

Ninety-five percent of 200 risk management executives surveyedsaid workplace safety has a positive impact on a companys financialperformance, according to the findings of the “Executive Survey ofWorkplace Safety” announced by Boston-based Liberty MutualGroup.

Joseph Gilles, executive vice president ofcommercial markets at Liberty Mutual, said “a study like this, webelieve, helps people understand the issues, understand whatquestions they should ask, and helps them realize that maybe theyshould do some research rather than just going by perceptions.Anytime people think about safety, the world gets safer.”

The survey reveals that risk management executives believe thatthe benefits of workplace safety go beyond a companys bottom line.Indeed, seventy percent report that protecting employees is aleading benefit of workplace safety.

The survey helps shed light on the impact that two types ofcosts associated with workplace accidents are having on U.S.businesses–direct costs (payments to injured employees and theirmedical care providers), and indirect costs (such as lostproductivity and overtime).

Of those surveyed, 93 percent see a relationship between thesecosts. Forty percent reported that $1 of direct costs generatesbetween $3 and $5 of indirect costs.

By comparing the findings on indirect costs with its ownresearch on the direct costs of workplace accidents and illness,Liberty Mutual estimates that U.S. businesses are paying between$155 billion and $232 billion annually on workers compensationlosses.

Liberty Mutuals “Workplace Safety Index,” announced this spring,provides a ranking of the 10 leading causes of workplace accidentsbased on the direct cost of each accident category, the companynoted. The Index estimated that the total direct cost of allworkplace accidents was $38.7 billion in 1998–the most recent yearfor which data was available at the time.

Survey findings also reveal that risk management executivesmight be focusing attention on certain causes of workplaceaccidents at the expense of other causes, and may need to realigntheir workplace safety priorities.

Risk managers, whose job it is to “worry about and preventlosses,” should be sure to prioritize correctly, Mr. Gilles said.For example, those surveyed report that “repetitive motion” is themost important cause of workplace accidents and say they will focusworkplace safety resources on this accident cause. Five otheraccident causes, however, each produced greater direct costs forcompanies in 1998, according to the Workplace Safety Index. Thosewere:

Overexertion.

Falls on the same level.

Injuries from bending, standing and reaching.

Falls to a lower level.

Being struck by an object.

The Index reported that workplace injuries caused by “repetitivemotion” produced $2.3 billion in direct costs for employers in1998–about a quarter of the $9.8 billion created by “overexertion,”which was the leading accident cause.

“Workplace safety has a ripple effect, either positive ornegative, on so many aspects of U.S. business operations today,”Mr. Gilles said. “The first step for executives is to takepreemptive measures to prevent employee pain and suffering causedby workplace injuries.”

He said this can be done by identifying those accident causeswith the greatest impact on their company and focusing workplaceresources on these causes.

Survey results were based on interviews with 200 executivesresponsible for workers' comp and commercial insurance at 125midsize firms (with between 100 and 999 employees) and 75 largecompanies (over 1,000 workers) in a range of locations andindustries.

Reproduced from National Underwriter Property &Casualty/Risk & Benefits Management Edition, September 17,2001. Copyright 2001 by The National Underwriter Company in theserial publication. All rights reserved.Copyright in this articleas an independent work may be held by the author.

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