Injury Costs Skyrocket, Study FindsChicago

Risk managers are putting a dent in reducing workplace injuries,but the cost of injuries grew faster than inflation between 1998and 2000, according to a survey by a provider of workers'compensation insurance.

While the frequency of disabling workplace injuries fellslightly more than 1 percent between 1998 and 2000, according tothe Bureau of Labor Statistics, Liberty Mutual's annual “WorkplaceSafety Index” found that the total cost of disabling workplaceinjuries was up $42.5 billion.

“I think a big part of the story is theescalating costs, and so far above inflation2.5 points aboveinflation,” reported Karl A. Jacobson, a senior vice president ofloss prevention at Liberty Mutual in Boston. The study was releasedduring a press conference at the Risk and Insurance ManagementSociety conference last month.

What the study does, he recently told NationalUnderwriter, is to “help us understand where to focus ourattention, because 10 causes of loss are accounting for about 90percent of the $42.5 billion.” Mr. Jacobson added that the topthree causes of loss account for nearly half that amount.

Mr. Jacobson said there has been a steady decline in injuriesfor approximately 15 years, which he attributed to an increase insafety awareness. The decline, he added, is driven by cost,regulation and employer concern for worker safety.

“What we would like to see happen is the business communitystand up and take notice of these trends,” he said. “If we justfocus in on those few causes of loss, we might be able to make someprogress.”

The survey information can also help businesses learn whatproblems others in their industry are facing. Someindustry-specific high severity injuries can be minimized withplanning, he said.

One example is an injury seen by contractorswhen an employee iscaught in a trench cave-in. “A contractor needs to look at confinedspaces and exposure to trench cave-ins, he said, “even though theymay have never had an incident.”

He said he hopes the survey will get the business communityinterested in their causes of loss and put processes in place “tounderstand who is being injured, what they are doing when they areinjured, where they are injured, and get to the root cause analysisof injuries in the workplace.”

It's important, he noted, for businesses to enlist theparticipation of employees. “The workforce has a lot ofunderstanding of what's going on in the work environment if youjust harness it,” he said. “With a facilitated process, they canidentify and solve the problems.”

Mr. Jacobson said that Liberty Mutual performs a similar lossanalysis profile for its customers every year and subsequently setsout a service plan.

Although every company's loss profile is slightly different, hesaid findings show that “in most industries, the major cause ofloss is overexertion from manually lifting, pushing, pulling andcarrying goods.”

The study found that the top three injury causes wereresponsible for 51 percent of the direct costs in 2000, up from 46percent in 1998.

The three leading causes of work-related injuries grew at ratessubstantially higher than inflation. They were:

Overexertion, which grew 12 percent after adjustment forinflation.
Falls to same level, which rose 17 percent after adjustment forinflation.
Bodily reaction, which grew 13 percent after adjustment forinflation.

The study also found that a small percentage of workers' compclaims continue to be responsible for most of the direct costs. In2000, disabling workplace incidents comprised 18 percent ofworkers' comp claims, but 93 percent of direct costs.

This is the third year the Liberty Mutual Research Institute forSafety has developed the “Workplace Safety Index.”

This year, according to the company, the index calculated theinflation-adjusted growth in direct costs by using the ConsumerPrice Index to measure wage payments to injured workers and theMedical Care component to track work-related medical careexpenses.

According to the company, a “disabling” incident results in anemployee missing work for six or more days. The “direct cost” of aworkplace incident consists of medical and lost wage payments toinjured workers and their health care providers.

The full results of the survey can be found at www.libertymutual.com.

Reproduced from National Underwriter Edition, May 12, 2003.Copyright 2003 by The National Underwriter Company in the serialpublication. All rights reserved. Copyright in this article as anindependent work may be held by the author.