The Direct and Indirect Costs of Workers’ Compensation Claims

Business owners are frequently unaware of all of the costs associated with a work-related injury. For example, a waitress at a restaurant slips and falls; medical expenses are incurred for a leg injury, and indemnity payments are needed for her two-week absence from the job. Translation? A deteriorating loss history that could increase the price paid for Workers’ Compensation insurance.

In addition, indirect costs associated with that injury can include:

  • A slowdown in service/sales during and immediately following the accident.
  • A disruption in operations during an investigation.
  • Increased wages for unscheduled overtime to make up for the absence of an employee.
  • The hiring and training of new/temporary replacement staff.
  • Greater possibility of litigation.
  • Increased potential for malingering and fraud.
  • Loss of employee morale, sense of security, and loyalty to the company.
  • Higher risk of employee turnover.

Clearly, the impact of a simple slip and fall upon the productivity and profitability of a client’s operation can be substantial, and selection of the right Workers’ Compensation insurer can help control these kinds of exposures.