New research from Marsh, the risk and insurance services firm, reveals that a majority of employers believe risk management strategies have had a positive effect on reducing employersí liability (EL) premiums and associated claims.
In the summary of 52 companies, 38, or 73 per cent indicated that risk management had a positive impact on EL costs.
Leader of the human capital risk management practice at Marsh, Barbara Dahill, believes the result is a positive reflection of the insurance market taking a more sophisticated approach to underwriting risk.
ìA large majority of respondents believe that risk management had a direct impact on EL costs. Our experience shows that organisations which take an active approach to managing employment risk reduce the number of serious workplace accidents.î
According to the UKís Health and Safety Executive, accidents, slips, trips and falls currently cost UK employers 512 million per year and comprise 33 per cent of accidents at work. With 64 per cent of survey participants indicating they felt they could improve their systems to prevent these types of accident, this is an area where good risk management practice could lead to a significant reduction in losses.
Departmental responsibility for EL risk management varies widely, with the survey showing that in 50 per cent of organisationsí EL risks were handled by health and safety managers, 24 per cent by insurance or risk managers, and the remaining 26 per cent by human resources, finances and other functions.
The greatest area of concern expressed by survey participants related to non-insurance costs associated with EL risk management. These included salary costs related to sickness absence, cost of temporary replacement labour, additional overtime and employee turnover.
Approximately 58 per cent of the organisations felt their company had not correctly identified the cost of sickness absence, while 72 per cent were not confident their company had successfully identified the cost of replacement labour during an illness.
Figures from the Chartered Institute of Personal and Development estimate the cost of sickness absence per year per person is approximately 600.
ìMost organisations realise the significant cost associated with compensation when an employee has an accident at work, but neglect to examine the costs of an ill employee and replacing them,î Ms Dahill said.
ìThe survey revealed 72 per cent of respondents felt identifying the cost of sickness absence would make the biggest difference in managing organisation risk.î
To download UK media releases, speeches and reports please go to Marsh UKís media centre www.marsh.co.uk/mediacentre.
Effective risk management reduces liabilities
Marsh reveals that a majority of employers believe risk management strategies have had a positive effect on reducing employersí liability (EL) premiums and associated claims
