The Hidden Cost of Traffic Crashes

Every two minutes somewhere around the world, someone dies in a roadway crash.

In addition to the heavy human toll, these road crashes have massive financial, legal, and social implications for companies.

In fact, traffic crashes costs from 1 percent to as much as 3 percent of a country’s GDP, according to “Investing in Road Safety: A Global Imperative for the Private Sector,” a report from the Together for Safer Roads’ (TSR) Expert Panel. The private sector bears much of the cost, as up to one-third of fatalities involve someone driving for work, not including incidents during commuting.

Vehicle crashes are the number one cause of work-related deaths in the U.S., accounting for 36 percent of occupational deaths. Motor vehicle crashes contribute to economic losses via wage-risk premiums, medical costs, early retirements, and loss of skilled staff. More than 90 percent of traffic deaths occur in low- and middle-income countries where data is scarce, and the loss of life undoubtedly contributes to poverty in these nations.

In the United States, where data is more readily available, the overall cost of motor vehicle crashes was about USD $242 billion in 2010, or about USD $1.4 million in direct costs per incident on average. Those crashes claimed 33,000 lives and resulted in nearly 4 million injuries. The cost was equivalent to 1.9 percent of the annual U.S. GDP.

Additionally, costs for auto injury rates continue to climb. According to the Insurance Research Council, from 2007 to 2012, average claimed economic losses grew 8 percent among personal injury protection (PIP) claimants, reaching USD $14,207 per claimant in 2012. Among bodily injury (BI) claimants, average claimed losses grew 4 percent, reaching USD $10,541 in 2012. These costs are due to growing medical care costs.

Additionally, the preponderance of citizens involved in road collisions are aged 15 to 29, on the verge of entering the workforce and their most economically productive years. These deaths and severe injuries to young people leave a tremendous human and economic gap.

It’s clear that improving the safety of the world’s roads will not only enhance the health and safety of employees, but also the performance of companies. Reducing crashes benefits businesses by improving employee health and safety, by protecting assets, by reducing productivity losses and healthcare costs, and by enhancing the efficiency and effectiveness of supply chains.

Certainly governments around the globe have primary responsibility for providing safer roads, but it’s vital for the private sector to support these efforts through improved vehicle safety, driver education, roadway improvements, and by collaborating with governments in countries where they have a business presence.