The Cost of

Accidents at Work
Nick Higginson
Health & Safety Advisor
Why Prevent Accidents?

 Humane
 Legal
 Economic
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
Legal
 Health & Safety at Work Act 1974
 Variety of other Acts and Regulations
 Failures can lead to:
 Enforcement notices
 Prosecution

 Civil 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
business”
Dr. 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 cure…Profits 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 Iceberg
Insurance Costs

Uninsured Costs
Insurance Costs

 Employers Liability
 Public Liability
 Product Liability
 Motor Vehicle
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
Piper Alpha
 167 dead
 Estimated cost of over £2 billion
Grangemouth
 BP refinery fire in 1987
 One person died
 Cost £50 million in property damage
 Cost further £50 million due to business
interruption
 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
Costs to Company

Wages for injured worker over period = £10000

Lost production/remedial work required = £8000
Overtime wages to cover lost production = £3000
Wages for replacement worker = £7000
Loss of time of manager/MD = £4000
Legal expenses = £3000
Fines and court costs = £4000
Increase in Insurance Premiums = £6000

Total cost to business = £45000

HS(G)96
 Costof Accidents
 HSE Research
 5 Case Studies:
 Construction Site
 Creamery

 Transport Company
 Oil Platform

 NHS Hospital
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
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
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
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
Accident Costs Calculator

See Handout