Majority of U.S. Businesses Report Workplace Safety Pays Off

August 31, 2001

Ninety-five percent of business executives report that workplace safety has a positive impact on a company’s financial performance, according to the findings of “The Executive Survey of Workplace Safety” by the Liberty Mutual Group.

Of these executives, 61 percent believe their companies receive a return on investment of $3 or more for each $1 they invest in improving workplace safety.

The survey also reveals executives realize the benefits of workplace safety go beyond the company’s bottom-line, with 70 percent reporting that protecting employees is a leading benefit of workplace safety.

The survey also helps shed light on the impact two types of costs associated with workplace accidents are having on U.S. businesses: direct costs, or payments to injured employees and their medical care providers; and indirect costs, such as lost productivity, overtime costs, etc. Ninety-three percent of executives surveyed see a relationship between these costs, with 40 percent of them reporting $1 of direct cost generates between $3 and $5 of indirect costs.

By comparing the findings on indirect costs with its own research on the direct costs of workplace accidents and illness, Liberty Mutual calculates U.S. businesses are paying a staggering $155 billion to $232 billion on workers’ compensation losses annually.

The Liberty Mutual Workplace Safety Index announced this spring provided the first-ever ranking of the 10 leading causes of workplace accidents based on the direct cost of each accident cause. The Index estimated the total direct cost of all workplace accidents was $38.7 billion in 1998, the most recent year for which data was available at the time.

Moreover, the survey findings reveal that business executives may be focusing attention on certain causes of workplace accidents at the expense of others, and may need to realign their workplace safety priorities.

For example, executives report “Repetitive Motion” is the most important cause of workplace accidents and that they will focus workplace safety resources on this accident cause. However, five other accident causes each produced greater direct costs for companies in 1998, according to the Liberty Mutual Workplace Safety Index. The Index reported that workplace injuries caused by “Repetitive Motion” produced $2.3 billion in direct costs for employers in 1998, about a quarter of the $9.8 billion of the leading accident cause — “Overexertion.”

Similarly, executives may place less priority on accident causes that have greater potential financial impact. For example, survey participants report “Falls on the Same Level” as the 7th most important cause of workplace accidents. However, the Liberty Mutual Workplace Safety Index ranked this category as the 2nd most important accident cause.

Survey results are based on interviews with 200 executives responsible for workers’ compensation and other commercial insurances at 125 mid-size firms (100 to 999 employees) and 75 large companies (over 1,000 employees) representing a range of geographic locations and industries.

This survey is part of Liberty Mutual’s ongoing focus on Workplace Safety. It follows the Spring 2001 release of the Workplace Safety Index, the first ranking of accident causes by direct costs to employers using Liberty Mutual claims data, combined with findings from the Bureau of Labor Statistics and the National Academy of Social Insurance. Both studies are available at www.libertymutual.com.

The Liberty Mutual Workplace Safety Index was developed by applying Liberty Mutual 1998 workers’ comp claims cost data to workplace accident frequency information provided by the U.S. Department of Labor’s Bureau of Labor Statistics for that year, the most recent data available at the time. The relative proportions of each accident type were then applied to national estimates of the cost of workers’ comp benefits from The National Academy of Social Insurance.

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