Uninsured costs

In a doctoral dissertation at Northwestern University in 1948, Simonds stated that the ratio of insured to uninsured costs was probably close to... 

Another way to consider the costs related to accidents is by dividing costs into insured and uninsured costs. If an insurance policy covers an accident, most likely it pays the expenses. Insurance may have limits on total claims or on actual elements covered. 

Insured costs are those paid by an insurance policy. Uninsured costs are those not paid by an insurance policy. When analyzing accident costs this way, one must also include the premiums for any insurance policy involved. 

Many safety and health experts estimate that the indirect (uninsured) costs of accidents, and the costs associated with them, are equal to five to ten times the direct cost of the accidents. These indirect costs are caused by many of the following ... 

Economic considerations should include the financial impact on the organisation of the uninsured cost of accidents, the effect on insurance premiums, and the overall effect on the profitability of the organisation and the possible loss of production following the issue of Improvement and Prohibition Notices. 

Essentially, there are two types of accident costs - the insured costs, and the uninsured costs. 

The uninsured (or indirect, hidden) costs of accidents should also be established. Bamber developed a list of uninsured costs which is considered to be objective, and which will readily be accepted by operational management as being costs associated with accidents ... 

However figures relating to the national situation are often not pertinent to individual factories and departments. Some figures obtained in 1989 for the uninsured costs of three types of accident were ... 

Uninsured cost of lost time injury accidents... 

When an accident occurs within a factory department, the cost of the accident usually is absorbed into the running costs of the factory as a whole, and will not be itemised on the departmental balance sheet. Nor will many of the uninsured costs be paid for from the departmental manager s budget. Furthermore, the insured cost - i.e. insurance premiums, such as employer s liability - will generally be paid from a central fund, usually administered by Head Office. 

Further research undertaken by Simonds in the USA in 1954 showed that accidents gave rise to considerable indirect or uninsured costs due to overheads and delays. 

Often, little effort is put into undisclosed costs. These cotrld be described as the uninsured costs. Information on these hidden costs is critical to plartrting strategies, decision making and control techniques. The logistics of srrch an rrrrdertaking provide a degree of doubt in the minds of some managers as to whether it would be a practicable exercise. 

Other reports may inclnde absenteeism, department compensation costs, etc. These reports will permit performance ratios to be developed to monitor efficiency - for example, the ratios of workers compensation costs to the total wages bill. Uninsured cost calculations for accidents allow the effect of accidents on profitability to be demonstrated. This can assist in seeking allocations for health and safety initiatives. 

Also, the listings of direct and indirect cost categories differ considerably. What is an indirect or hidden or uninsured cost in one list would be excluded in another. For example, some listings include lost productivity or loss of expected profits as an indirect cost. Chapter 6 in Safety Management, by Grimaldi and Simonds (1989) is titled Cost Analysis. It contains a six-page discussion on the Invalid and Restricted Items that should not be included in computing uninsured costs. This is an example of what is said. 

As a minimum, the Bird data implies that employers absorb uninsured costs at a ratio of 6 (5 +1) to 1 of insured costs. At a maximum, the ratio is 53 (50 + 3) to 1. This author has not located research and hard data that supports such ratios. Depictions of Bird s iceberg have appeared in many texts and articles, and his cost ratios are frequently repeated. 

Any accident or incidence of ill-health will cause both direct and indirect costs and incur an insured and an uninsured cost. It is important that all of these costs are taken into account when the full cost of an accident is calculated. In a study undertaken by the HSE, it was shown that indirect costs or hidden costs could be 36 times greater than direct costs of an accident. In other words, the direct costs of an accident or disease represent the tip of the iceberg when compared to the overall costs. 

On the other hand, accidents and other incidents may prove very costly not just in terms of lost production, but also in terms of compensation which may have to be paid out to those injured and so may adversely affect insurance costs. A study by the HSE has shown that in a number of case studies, the uninsured costs such as those which result from loss of goodwill or hiring and training of replacement staff often far exceed the insured costs. Indeed, for the cases under consideration, the uninsured costs exceeded the insured costs by a... 

An accident will have both insured and uninsured costs. Insured costs include worker s compensation insurance premiums and medical expenses. Uninsured costs include ... 

The most typical safety measurement tool is to track the number of accidents. The types of data needed to do this are costs of system downtime (and lost productivity and product or market share), equipment damaged during an accident, accident cleanup, equipment replacement, and, of course, personnel injuries and death (including medical costs, workman s compensation, and potential lawsuits). These data can be easily trended and tracked on a monthly or quarterly basis. You can then compare your statistics to national averages. The U.S. National Safety Council (many countries publish comparable information at the federal governmental level) publishes accident costs across all industries. These costs include estimates of lost wages, medical expenses, insurance administration costs, and uninsured costs. 

U.S. National Safety Council, (1991). These figures include estimates of wage losses, medical expenses, insurance administration costs, and uninsured costs. 

The relationship between insured and uninsured costs of accidents is highlighted in HS(G)96 where for every 1 paid in insurance premiums, the average non-recoverable costs were about 10 times the amount paid in premiums. The losses from day-to-day accidents range from 8 to 36 times the amount paid in premiums. 

This is the control of all insured and uninsured costs arising from any incidents which downgrade the system. It includes aspects associated with business interruption and identifies the possible tools and methods of measurement. 

According to the National Safety Council, the true cost of occupational injuries and deaths to the nation far surpasses the cost incurred from woikers compensation alone. In 2005, the cost was 160.4 billion, which includes wage and productivity losses of 80.0 billion, medical cost of 31.3 billion, and administrative cost of 34.4 billion. It also includes 10.7 billion for such uninsured costs as the money value of time lost by workers other than those with disabling injuries who are directly or indirectly involved in the injuries and the cost to investigate injuries, write up reports, etc. In addition, it includes damages to motor vehicles in work injuries of 1.7 billion and fire losses of 2.3 billion. 

---