The Cost of

Accidents
Nick Higginson
at Work
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 cureProfits 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