April 7, 2003
Annual Liberty Mutual Workplace Safety Index Shows Direct Costs of the Three Leading
Causes of Workplace Incidents Grew Significantly Faster...
- The cost of disabling workplace injuries and illnesses grew faster than inflation
between 1998 and 2000, while the direct costs of workers compensation claims are concentrating
in a relatively small number of injury causes. Liberty Mutual, the leading provider of workers
compensation insurance, products and services, today announced these and other findings on
safety in the U.S. workplace with its annual Workplace Safety Index.
Highlights from this year's Safety Index include:
This is the third
year researchers at the Liberty Mutual Research Institute for Safety developed
the Workplace Safety Index. This year, the Index calculated the inflation-adjusted growth in
direct costs by using the Consumer Price Index to measure wage payments to injured workers,
and the Medical Care component of the Consumer Price Index to track work-related medical care
expenses. A disabling incident results in an employee missing six or more days from work.
The direct cost of a workplace incident consists of medical and lost wage payments to injured
workers and their healthcare providers.
The full results
of the Liberty Mutual Workplace Safety Index - including the ranking of
10 causes of disabling workplace injuries based on their direct costs - are available at
Employers feel the magnitude of workplace injuries twice -- the injury to an employee, and then
the costs stemming from that event, notes Karl Jacobson, a senior vice president of Loss
Prevention at Liberty Mutual. By identifying the leading causes of disabling workplace injuries
and illnesses, the Safety Index gives employers a view of those areas in their operation that are
the most costly in both human and economic terms.The findings also underscore the total financial
impact of workplace injuries. While $42.5 billion in direct cost is significant, it is only a portion of
the total costs of work-related injuries.
An earlier Liberty
Mutual survey found that 93 percent of executives saw a relationship between
the direct and indirect costs of a workplace incident. Indirect costs include the overtime, training
and lost productivity related to an injured employee not being able to perform their normal
work. Fully 40 percent of managers reported that each $1 of direct costs generated between $3
and $5 of indirect costs.Using this formula, according to Brian Melas, a senior vice president of
commercial insurance at Liberty Mutual, the direct costs of disabling workplace injuries in 2000 produced
between an additional $127 billion and $212 billion of indirect costs, bringing the total financial impact of
disabling workplace incidents to between $170 billion and $255 billion.
By removing consumer
and medical inflation to show real growth in direct costs of disabling
workplace injuries, the Safety Index lets us look for the drivers of that growth, notes Mr. Melas.
According to Mr. Melas, potential factors influencing real growth may include:
The annual Liberty Mutual Workplace Safety Index identifies the direct costs of disabling
workplace incidents and the top 10 causes of these based on data from the Bureau of Labor
Statistics, the National Academy of Social Insurance, and Liberty Mutual. This year s
Workplace Safety Index reports trends by comparing findings for 2000 to those from 1998. To
adjust for inflation, 2000 findings are reported in 1998 dollars.
The 2003 Safety Index was prepared by the Liberty Mutual Research Institute for Safety, as part
of its ongoing efforts to help employers better protect workers and minimize the total cost of
risk. The first step in developing the Safety Index was to apply Liberty Mutual 2000 workers
compensation claims cost data to the workplace injury frequency information provided by the
federal Bureau of Labor Statistics for injuries occurring in that year.
To provide a broader
perspective, the relative proportions of each injury type were applied
national estimates of the cost of workers compensation benefits from the National Academy of
Social Insurance, which includes information from a broad range of workers compensation
Mutual Group is a diversified international group of insurance companies
and one of the largest multi-line insurers in the North American property and casualty industry.
The group has more than $50 billion in consolidated assets, more than $13 billion in consolidated
revenue and ranks 129th on the Fortune 500 list of largest corporations in the United States. The
A.M. Best Company has rated Liberty Mutual A (Excellent).
Along with being
the leading provider of workers compensation insurance, programs and
services in the United States for 65 years, Liberty Mutual provides a wide range of insurance
products and services, including general liability; commercial auto and business property; group
life and disability; private passenger auto and homeowners insurance, and individual life and
The company employs 35,000 people in more than 800 offices throughout the world.
injuries result from excessive lifting, pushing, pulling, carrying, or
throwing of an object."
"Bodily reaction injuries are caused from bending, climbing and slipping or tripping without falling."
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