After an injury or accident, there are two types of workers comp costs to consider: direct and indirect loss costs. Direct loss costs are readily quantifiable and include items like the amount paid to repair any damage, your deductible, and medical payments. Indirect loss costs are more difficult to quantify, but safety experts say they are usually several times greater than direct losses.
Indirect loss costs include administrative time spent to handle the claim, diminished productivity as concerned employees gather to discuss the incident, decreased production output, penalties associated with missing deadlines, and damage to your company’s reputation. To understand these indirect costs and their impact on your business, evaluate your last few claims. Review your loss runs to determine your expenditures, revenue shortfalls, and soft costs (like postponement of new business ventures). Then talk with team leads to determine the challenges they encountered after a claim to estimate their time spent handling the incident.
Both direct and indirect costs of claims take a toll on your business. A great risk control program can help. Talk to us about good risk management resources.