The “Invisible” Costs of Workers’ Compensation Injuries

For many businesses, the cost of hiring and maintaining a productive work force can be the single largest expense in their budget. The expenses associated with advertising for positions, interviewing the potential employees, running background checks and drug testing can have a significant impact on the cost of operating your business. In addition to the actual costs to screen and hire workers, once a business employs its workforce, it is required by law to provide workers compensation insurance for the employees in order to provide compensation and medical care for each employee in the event that a worker is injured or becomes ill as a result of his or her job activities.

Depending on the type of work that the company does, workers’ compensation insurance can be very expensive. Workers’ compensation will pay for the obvious costs of illnesses or injuries suffered by the employees. These costs include first aid costs that are incurred at the time of the injury; medical payments to doctors, hospitals and medical providers after the initial incident; income payments to the workers during the time of their incapacity; and the legal and claims costs involved in handling the workers claim, treatment and return to the workforce.  Unfortunately, the cost of workers’ compensation insurance is not the only cost to businesses when their workers are injured. In fact, the “invisible” costs of worker injuries and illnesses can be even more costly than the actual cost of workers’ compensation coverage.

To begin with, when a worker is injured, the company loses the productivity and revenue of the injured worker. But the worker is not the only one affected by the injury. Other employees have to spend time dealing with the injured worker when the injury occurs. Supervisors and managers have to spend extra administrative time dealing with the injury, taking care of the employee, completing forms and re-organizing the workflow to offset the loss of the employee. The interruptions, distractions, extra work, rearranged schedules and workloads have a negative impact on the productivity of others in the workplace, and cause a loss in revenue.

Secondly, there are additional costs that occur when a worker suffers an incapacitating injury. Other workers have to work additional hours to make up for the absence of the worker. This adds to overtime costs. It also increases the chance for additional injuries because of the long hours they have to work. Significant additional hours can also negatively affect employee morale in the office. Quality also suffers as workers do not have the ability to perform at the same level over long periods of time. Temporary staff can reduce the need for other employees to work long hours, but they increase costs as well.

Perhaps the most significant “hidden” cost is the impact a work injury can have on a business customer. The loss of a productive worker can mean a business will not meet production deadlines. It can mean a key salesperson will not be able to sell its products. A high level customer service representative, absent due to an injury, won’t be there to solve a customer’s problem and “save” the account. Injuries to key employees can cost businesses in many ways not usually considered when a business buys its workers compensation coverage. The total cost of workers compensation claims can be significantly higher than just the cost of the insurance premiums.

Businesses can reduce or eliminate these “invisible” costs by preventing worker’s compensation injuries. Selecting a broker with a focus on loss prevention, coupled with a high quality insurance carrier can assist the business to avoid worker injuries and all of the costs associated with them. Western Growers Insurance Services has experienced, well trained loss control representatives that specialize in training employees to avoid injuries as well as making recommendations for businesses on how to reduce their exposures. WGIS also has a top notch claims specialist who can work with the business and the carrier to minimize the costs of workers compensation claims and keep premiums at a reasonable price.

In a similar way, WGIS can assist members with their property and casualty insurance. WGIS can evaluate the member’s current coverage, make recommendations for changes, and connect the member with a well known, high quality insurance carrier.

If you would like to discuss your insurance program with WGIS, please contact me at 949-885-2287 or gnelson@wga.com.