There is always more to an accident than meets the eye, especially cost.

It has been estimated, by the International Loss Control Institute, that for every insured loss there is an equivalent or potentially greater, hidden uninsured loss. The extent of this loss has been varyingly put at between the same and, two and a half times that of the insured loss. In 1996/97 the total number of reportable injuries resulting in absence from work of over three days was 124 381. Of that number 45 202 (36.3%) were injured as a direct result of lifting, handling or carrying and the part of the body most effected was the back with 30 793 (25%). This is further reflected in the huge increase in the cost of UK Employer's Liability Claims. There is little doubt that the cost of settling claims will continue to rise as more and more people adopt the 'where there's blame there's a claim' culture. The inevitable outcome of escalating insurance payouts is escalating insurance premiums. Some 'high risk' professions have seen premiums treble in as many years.

The Hidden Costs

Whilst employer's liability insurance is both necessary and mandatory it does not cover the true cost of an accident. Damages, expenses and legal costs will be met but the list of what it will not pay for is exhaustive.

Replacing Equipment

It will not pay for unplanned improvements or the replacement of damaged plant, equipment or machinery. A lot of companies only carry third party vehicle insurance cover so all of the damage to their own fleet will be met internally.

Replacing Staff

In the event of a member of staff being prematurely retired it will not finance the advertising, recruitment, selection and continuing training of replacement staff. Consider also that the injured employee may take with them 25 years experience and loyalty that amounts to a massive investment by the company over many years.

Loss of Confidence

Depending on how high profile an incident is it could result in poor publicity and the consequential loss of staff and customer goodwill. An injury to a respected and popular colleague can have a damaging psychological effect on other employees with an inevitable negative effect on performance and morale. Any one of the above can easily result in a de-motivated workforce. The effect of this is under-performing staff, poorer quality control and poorer product.

Bad Publicity

Bad publicity can lead to a loss of confidence by the general public who, in the final analysis, are your customers. The recent and continuing bad press given to the entire rail network is one such example with some business analysts predicting it could take the industry five years or more to recover.

Productivity and Profit

Productivity can be seriously hampered which may require extensive overtime to be worked simply to maintain previous levels of output. Ultimately a serious accident may necessitate investigation by senior staff followed possibly by lengthy court appearances.

There is one other consideration that should not be underestimated and that is the cost of attempting to recover uninsured losses through increased production. If one makes an assumption that an uninsured loss, as a result of any one of the above, is £20 000 then a company working to a modest profit margin of 5% would need to generate an extra £400 000 worth of additional business simply to maintain the status quo.