Cost of Accidents at Work, an Ecuadorian Approach

Abstract

Abstract This paper explain the costs considerations took to produced a preliminary software model to estimate incidents costs at country level by a number of variables. The model was based on cost data from international models and was adjusted to local requirements of Ecuador, South America. The accident cost estimation proved difficult both for the companies and the victims to exactly estimate the various costs of accidents at work. This task was further complicated by the fact that many of the expenses are at least partly reimbursed by insurance. For some types, the exact amount could still be retrieved from documents related to the insurance, while for others neither the company nor the victims were in a position to provide an accurate estimate. A typical example of this problem is related to one major element of total costs, i.e. the costs of health care and rehabilitation. In the estimates, the labor costs were calculated based on the labor cost and the lost working time. This is a theoretical approach. There are important differences between countries on how the costs of lost working time are actually dealt with between the society, the employer, the victim and the private/public insurance handling the reimbursements. Depending on the insurance system, the validity of the theoretical approach used may also vary according to whether the accident resulted in a short or long incapacity or full or partial permanent incapacity or death. The final result of the software is an approach to evaluate the cost-benefit application of corrective action to avoid that the accident recurs. Taking two established costing methods as reference, they were changed to tailor for the particular considerations so that it can be as accurate as possible in determining accident costs of this company in Ecuador. This led to the creation of the software named CIA-SYS (Accident and Incident Cost Calculator) with the aim implements it. Furthermore, this software also intends to be a decision-making aid for managers to implement preventative and corrective measures in the company.