InFocus: Managing the Workplace Compensation System

How much do workplace injuries really cost?

How much do workplace injuries really cost?

Workers’ Compensation offers some financial protection to employers who are faced with an employee claim but there are a whole host of indirect costs that insurance doesn’t necessarily cover.

From lost productivity and scheduling issues to the time admin, execs and HR professionals spend managing the claim – the indirect financial impact soon adds up.

Indirect v. direct

The direct costs of any claim are normally fairly straight-forward and include any medical bills and wage replacements – but this dollar amount that guides the insurer’s pay-out is usually a lot less than what the company actually incurs.

In fact, according to a study done by the Stanford University Department of Civil Engineering, indirect costs can often exceed the direct costs – researchers found that a fracture, on average, generates direct costs of $50,000 – the indirect costs, however, are estimated at $55,000. 

According to insurance broker Jeff Cavignac, indirect costs include but are by no means limited to the following:
  • Wage costs related to time lost through work stoppage associated with the worker’s injury
  • Overtime costs
  • Time spent by administrators, supervisors, safety personnel and many others who have to handle the claim
  • Cost of hiring and training a replacement worker
  • Lost productivity related to work rescheduling, new employee learning curves and accommodating the injured employee
  • Cost to clean up, repair and replace equipment and machinery that may have been damaged
Of course employers also have to consider the impact a claim could have on the cost of the company’s insurance premiums – manage it right and organizations may be able to expect a welcome rebate but get it wrong and you may be facing a surcharge of hundreds of thousands of dollars.

Surcharges are an Ontario only reality.  The remainder of the provinces increase your premiums if your claim performance is poor, and down if your prerformance is good.

“If not managed properly, these claims can quickly become very, very expensive to an employer,” warns Ross Wace, Isthmus Legal COO.

Using numbers to your advantage

If there was a silver lining in the staggering financial repercussions associated with poorly managed workplace management claims, it would undoubtedly be a tarnished one – but industry expert Neil Sharma says HR professionals can encourage senior management to get a better grip on things by illustrating the phenomenal cost.

“If HR professionals want to save money and better embrace workplace injury management claims, they’ve got to force senior management to take a more active interest,” he told HRM. “Using operational justification and financial justification is the most effective way to do this.”


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Isthmus Legal is a Canadian law firm and consultancy that specializes in workplace injury claims management. Isthmus Legal is a partner and representative of employers, providing an ongoing, integrated and complete workplace injury claims management solution.
Isthmus Legal offers legal and consultative services in the form of the Integrated Advocacy Program (IAP), which bridges the gap between legal services and consultative services, while maintaining the highest legal standards and cost efficiencies of a consultative approach.
With extensive experience in workplace injury claims management and legal services, Isthmus Legal has been successful at demystifying the workplace compensation system and creating absolute claims management peace of mind for their clients, such that they can feel confident and secure that the management of their workplace injury claims are being handled with precision, competency and speed in order to maximize operational efficiency. Isthmus Legal provides its clients with successful management of workplace injuries by advocating tirelessly on behalf of the client's interests, providing them with a voice and a total solution to their workplace injury claim issues, while mitigating claim costs.