Commercial insurance covers the financial costs of a loss or an accident to insulate a business from the ugly surprises of injury, theft, fire, litigation, or any other number of innumerable hazards facing today’s job creators. Insurance is the vehicle that helps your organization stay financially viable to compete the day after a loss. However, there are many other impacts of an accident that insurance cannot fix and for which safety programs, policies, and procedures can prevent.
The best way to explain this is the Iceberg theory. The tip of the iceberg is the financial impact that insurance will help recover; the hidden costs are everything that’s under the water that you can’t immediately see, but still exist. These hidden parts of the iceberg are what sunk the Titanic.
Hidden Costs of Accidents:
- Lost productivity
- Personnel loss and replacement time (HR fees, training, and knowledge base)
- Loss of reputation (imagine your accident on the cover of a newspaper!)
- Loss of customers due to delivery delays
- Inability to attract quality workers if you have an unsafe reputation
- Time to replace damaged equipment
- Loss of market share as competitors take advantage of your down time
- Loss of opportunity (some companies won’t do business without a strong safety plan)
Some reports show that these hidden costs can actually add up to 70% of the perceived claim cost as reported to insurance. Some managers chalk this up to “business as usual,” but a savvy company knows that these costs are lost dollars and that investing in safety makes financial sense. 70% of a $100,000 claim is $70,000 – just how much revenue would your organization have to take in to cover that loss?
There are many a sad story of companies shuttering their doors or good people losing their jobs due to a careless accident that was covered, but that could have been prevented. At the end of the day, safety isn’t about insurance – it’s the only way to run a smart business.