How Safety Programs Can Improve Your Bottom Line| Property & Casualty

How Safety Programs Can Improve Your Bottom Line| Property & Casualty

Occupational Safety and Health Administration (OSHA) statistics clearly illustrate how workplace safety and health management systems can dramatically reduce injury and illness expenses. Unfortunately, record-breaking inflation can make these potential safety-related savings the difference between profits and losses. When evaluating the costs associated with safety, consider the following OSHA statistics:

  • U.S. employers pay nearly $1 billion per week for direct workers’ compensation costs.
  • Injuries and illnesses directly increase workers’ compensation and retraining costs.
  • Lost productivity from injuries and illnesses costs companies roughly $63 billion each year.

To help battle inflation’s impact on your bottom line, you must first understand how safety programs can help your business survive.

Why Organizations Should Invest in a Safety Program

Organizations that invest in occupational safety and health programs can experience a positive return on investment (ROI) from:

  • Efficient Operations: By promoting health and safety as a priority, you can see returns in higher productivity and revenue.
  • Employee Morale: The Great Resignation has made recruiting and retaining talent more difficult. Utilize a health and safety program to interest new employees and show current staff commitment to their care.
  • Positive Image: Your public persona as safety-minded and health conscious can influence your revenue.
  • Regulatory & Legal Compliance: Compliance-violation fines can cost your organization financially and damage your reputation.
  • Financial Implications: A safety and health program can minimize worker injuries and incidents, which in turn increases medical and legal savings.

Return on Investment (ROI)

OSHA studies indicate that for every $1 investment in an effective safety program, you can save up to $6 in occupational illnesses and injuries. Establishing these types of measurable benchmarks can demonstrate your value of safety over time. It is important to remember that your total cost of safety is only part of your overall cost of risk management. When safety is controlled and monitored, it can also help drive down your overall cost of risk.

Proving the Value of Safety

Endorsing your value of safety is often a challenge as measuring ROI can be laborious. Objectively, you must evaluate safety in relation to your investment against the return expected. There are many different approaches to measuring the cost of safety. Your company’s objective will determine the method, as it regulates tracking’s costs and complexity.

Since measuring can be time consuming, general cost formulas are available. A Stanford study places safety costs at 2.5% of overall costs, while an Economist Intelligence Unit (EIU) report estimates general safety costs at 8% of payroll.

Safety Cost Categories

To measure safety in relation to profitability, you need to conduct more accurate tracking. Safety costs can be divided into two categories:

Direct or Hard Costs

  • Employee wage benefits
  • Medical payments
  • Vocational rehabilitation costs
  • Death/dependent benefits
  • Legal fees
  • Claims investigation costs

Indirect or Soft Costs

  • Wage & hour costs
  • Administrative expenses
  • In-house claim investigation costs
  • Hazard mitigation costs
  • Production deadline extensions
  • Training expenses
  • OSHA fines
  • Insurance premium costs
  • Repairs
  • Workplace culture concerns
  • Reputational struggles

Calculating soft costs, minor accident costs are four times greater than direct costs. Serious accidents are 10 to 15 times greater, especially if the accident generates OSHA fines or litigation costs. According to the International Risk Management Institute (IRMI), measuring costs will drive improvement. By monitoring data, you will become more aware of costs and can implement precautions.

Cost of Injuries

Understanding the expenses related to injuries helps you understand the return on safety and health efforts. With this data, you can easily understand the financial resources your health and safety initiatives are saving through injury prevention. Cost-saving areas include:

Property & Equipment

  • Repairing equipment, machinery & property damage
  • Purchasing new equipment & machinery
  • Additional workplace modifications



  • Greater absenteeism
  • Higher turnover
  • Overtime wages for productivity losses
  • Wage enhancements for injured employee
  • Compensation for employee replacement

Insurance & Compliance

  • Higher insurance premiums
  • Legal expenses & penalties
  • OSHA citations & fines

Safety Business Strategy

Companies who focus on safety as a core business strategy come out ahead. Consider the following, as reported by the American Society of Safety Engineers:

  • A West Virginia coal mining company reduced its workers’ compensation rate to $1.28 per $100 payroll. Comparatively, its competitor’s rate was $13.78.
  • An OSHA consulting program reduced a forklift manufacturing operation’s losses from $70,000 to $7,000 per year.
  • One employer’s fall protection program implementation reduced accident costs by 96% or $4.25 to $0.18 per-person-per-hour.

Where to Find Safety ROI

Implementing a health and safety program as part of an overall culture of safety can offer multiple opportunities to impact your organization’s ROI, such as:


The primary goal for any health and safety program is injury prevention. If your injury count is lower since implementing certain health and safety measures, you can calculate the cost savings your safety initiative is yielding.

Productivity & Time Lost

Creating a culture of safety promotes employee health and increases employee engagement. When your staff feels their workplace is safe, it can eliminate stress and permit them to focus on productivity.

Compliance Costs

OSHA can issue citations and fines for workplace health and safety standard violations. Citations can be very costly, ranging from $1,000 to $145,000 per instance. A safe and compliant workplace can also help prevent OSHA-imposed shutdowns and lost revenue.

Insurance Expenses

Promoting health and safety can influence your organization’s bottom line by lowering insurance expenses. Health and safety enhancements can decrease the amount and cost of claims, and ultimately factor into your premium rates.

Carriers utilize a consecutive six-year period review to calculate premium rates. This means your 2022 premium rate would derive from 2015 to 2020 policy reviews. Continuous improvements and a long-term commitment to safety significantly impacts your rates. Additionally, some carriers will offer discounts for initiating risk mitigation programs and the strategies they offer.

Employee Turnover

Hiring new employees can be expensive and time consuming. Job replacement can take up to 42 days, cost over $4,000 per position and calculate to nearly 100% of the annual salary. Health and safety initiatives are shown to help retain employees and lower turnover expenses. A University of Chicago study reported that 85% of employees place workplace safety as a top benefit.

We’re Here to Help

Safety experts believe that there is direct correlation between safety and a company’s profit. We’re committed to helping you establish a strong safety and health program that protects both your workers and bottom line. Connect with a member of our team to learn more about our value-added services.

How Safety Programs Can Improve Your Bottom Line| Property & Casualty Safety and Health Administration (OSHA) statistics clearly illustrate how workplace safety and health management systems can dramatically reduce injury and illness expenses. 2022-08-24T16:00:00-05:00Occupational Safety and Health Administration (OSHA) statistics clearly illustrate how workplace safety and health management systems can dramatically reduce injury and illness expenses.Risk MitigationProperty & Casualty InsuranceYes