Cost-benefit analysis of investment in occupational health and safety in Colombian companies

Objective: To determine whether investment in preventive measures by a Colombian insurer reduces rates of work-related injuries and results in positive returns from these investments. Methods: The study is based on monthly panel data of 2011-2015 of 303 medium and large companies affiliated with a private insurer in Colombia. We undertook regression modeling analysis to assess the effectiveness of incremental investments in occupational health and safety (OHS) prevention measures. The cost-benefit analysis is from the insurer's perspective. Results: Investment in OHS per full-time equivalent was statistically significant at the 1% level. We estimated that 4919 injuries were averted through these investments, resulting in the avoidance of $3949957 in costs. Our results suggest that the investments were worth undertaking from the insurer's perspective. Conclusions: This paper provides new empirical evidence on the effectiveness and cost-benefit of OHS investments in a middle-income country. Incremental investment in OHS can be effective and cost-beneficial.