23 May The real average cost of an accident
When you’re trying to justify your investment in safety culture change it might feel like the moral argument, that no one should get hurt, is enough. But senior decision-makers need more than just soft benefits, they need hard figures as evidence to prove that investment in safety culture change really does improve the bottom line.
With that in mind I decided to do some investigation into the HSE’s updated accident cost figures to give you some sensible figures that help justify your investment in health and safety. I base my numbers on a Lost Time Incident because it’s something that most businesses are familiar with.
What’s important to remember is that when you calculate what Health and Safety failure costs you must recognise that there are costs related to both injury and associated (but not necessarily related) occupational ill-health.
The real cost of injury
In 2010/11 the HSE calculated the average cost of a reportable incident to be £3,100. This includes:
- Sick pay payments
- Insurance premiums
- Production disturbance costs
- Administrative and legal costs
This year, a reportable incident classification was 3 days off work and over which is broadly equivalent to what most businesses would call an average Lost Time Incident (LTI). Some LTIs will be more and some less but a recent study we conducted on the average number of days lost per LTI in a business put it at 14 days off work, which leads us to surmise an LTI would conservatively be estimated at just £3,100.
Of course, for every LTI there are minor incidents which also cost organisations money. Lots of different studies put the figure between 10 minor injuries for every serious injury (LTI) to 50 minor injuries for every serious injury.
If we consider the midpoint of these two figures and take a ratio of 25 minors for every LTI and use the HSE cost calculation of £30 per minor then for every £3,100 per LTI you need to consider there will be £750 spent on minor injuries.
So per LTI in a business we can reasonably conclude that £3,850 will be spent on the cost of the incident itself as a conservative estimate.
The real cost of occupational ill-health
What’s even more significant is the associated cost of occupational ill-health for an incident. The HSE calculates this at £4,000 per incident, and there is a ratio of 0.8 instances of ill-health for every injury (including minor injuries).
For each LTI there are 25 minor injuries (26 injury cases in total), so on a ratio of 1 to 0.8 there will be 20.8 cases of ill-health. So in conclusion we can reasonably surmise that per LTI in a business £3,850 will be spent on the immediate injury and £83,200 will be spent on ill-health.
This gives a health and safety cost of failure per LTI of £87,050.
When you consider that any credible culture change programme will prevent many LTIs (not just a single incident costing £83,200), the justification for investment in one becomes much more compelling, both morally and financially.