Workplace Violence Insurance – What are the Costs?
This is the beginning of a series of videos on workplace violence and the insurance implications associated with this business risk.
Today we’re going to focus on the costs of a workplace violence incident or event.
Let’s start with the fact that not all workplace violence takes the form of an active shooter situation. There are varying degrees of violence that take place in the workplace environment. Bullying, fist fighting, and intimidation are forms of workplace violence that can escalate all the way up to knife fights, gun threats, and bomb threats. We may see on the nightly news only a fraction of workplace violence occurring across America every day.
Regardless of the intensity or seriousness of that violence, there are costs.
Human costs in the form of loss of life, serious injuries, and mental distress to those employees, guests, visitors, or customers on the premises during the event and the costs extended to the families of those directly affected. For example, a woman killed during a shooting at work, the family breadwinner, will suffer long-term financial hardship from the loss of that breadwinner.
Then there are business financial costs – hard dollar and soft, indirect costs. These can be wide-ranging expenses incurred by a business as a result of an actual or threatened event.
Here you’re talking about the costs associated with the business’s response to a workplace violence event. Crisis Management Consultants increased the cost for temporary security and the legal costs that may stem from the event.
Then there are the consequential costs a business will incur or suffer following an event. Things like a business interruption – the loss of revenue and productivity following a violent event.
Depending on the severity of an event, there likely will be a voluntary shutdown of operations, at least for a short period of time. That could be a day or two; it could be a month or two. A violent event may force that shutdown for crime scene investigations, or it could be what I would call a fear-based shutdown – your employees refuse to show up for work out of fear that violence may happen again, and they don’t want to be caught in the middle of it.
Regardless of how long either of these situations lasts, your business is going to lose daily production value or revenue. We’ll discuss standard business insurance policies in the next video and why workplace violence isn’t covered by business interruption insurance.
Then an affected business will experience loss of productivity, decreased employee morale, and employee retention problems as a firm goes through the recovery process. These all will impact earnings.
There will be ongoing salaries for victims and their replacement workers, medical, dental, mental health expenses for employee victims of workplace violence – we’ll also cover this in the next video why worker’s compensation may not respond to these claims.
Recuperation expenses for victims and relatives,
Loss of life benefits to victims of an event.
Grief counseling, funeral expenses, trauma care, and the list goes on.
Depending on the event’s severity, these costs will add up to some significant uninsured loss and make a recovery, stabilization, and growth difficult, even for a high-performing company.