Episode 2 of our History of Safety series
In Episode 1, we saw that the idea of answering for a hazard is as old as Hammurabi. Episode 2 is about the moment that idea became a system. On July 6, 1884, Germany’s Accident Insurance Law was promulgated, and an injured worker no longer had to prove that anyone was to blame.
Before 1884: prove it, or pay for it yourself
Under German law of the day, an injured factory worker or miner who wanted compensation had to prove that his employer, or a manager, was at fault. That meant suing the man who paid his wages. Without that proof, the injury was a private misfortune, and the family absorbed the loss. A fault-based system was a poor fit for mines, mills and railways, where many accidents had no clear person to blame.
Why the Iron Chancellor cared
Otto von Bismarck was not acting out of kindness, and he never claimed to be. By the late 1870s, the thing that worried him most was the workers’ movement growing in Germany’s factories. In 1878 he pushed through a law that banned socialist associations, broke up their meetings and prohibited their publications. Repression alone was not working, so in November 1881 a message from Kaiser Wilhelm I to the Reichstag set out a second track: improve the welfare of the workers. Sickness insurance came in 1883. Accident insurance followed in 1884. When critics called his programs socialism, Bismarck answered, in effect, call it whatever you like.
The bargain
The 1884 law worked like this:
- No fault required. Benefits were paid no matter who caused the accident.
- Employers paid, and only employers. They were grouped by industry into mutual insurance associations, so mines insured with mines and factories with factories.
- Care and a pension. For the first 13 weeks, the sickness insurance funds covered the injured worker. After that, accident insurance took over, with medical care and a pension of up to two-thirds of earnings for a worker who could no longer work.
- No lawsuits. In return, employers were released from most lawsuits over workplace injuries.
The worker gives up the right to sue. The employer pays, no matter who was careless. That trade is still the heart of every workers’ compensation system today, including the one covering your crew.
Think of it as a group insurance plan for each industry, paid for by the owners. Once every injury came out of their own pool, they had a reason to stop injuries from happening.
The twist: paying for injuries led to preventing them
Because each industry now paid for its own accidents, each industry had a reason to prevent them. In 1886, one of the industry associations issued the first accident prevention regulation. Prevention became a required duty of the associations in 1900, and by 1910 they employed 339 technical inspectors. For the first time, the people paying for injuries were also writing the rules to stop them.
The idea crosses the ocean
Britain passed its own compensation law in 1897. New York passed a compulsory compensation law in 1910, and on March 24, 1911, the state’s highest court struck it down. The next afternoon, the Triangle Shirtwaist Factory fire killed 146 people. That same year, Wisconsin passed the first state compensation law to survive a court challenge. New York amended its constitution, passed a new law in 1913 and began paying benefits in 1914. By 1949, every state had a workers’ compensation program.
What this means on your job site
- Your workers’ comp policy pays an injured worker regardless of fault, and in return it is generally the worker’s only remedy against you.
- Your premium reflects your own claim history through your experience modification rate (EMR).
- So the incentive Bismarck’s law created in 1884 still applies to you: preventing an injury costs less than paying for one.
- Your insurer’s loss-control visits are the modern descendants of those first association inspectors.
Next up
Episode 3 posts November 3: the Triangle Shirtwaist fire, the day after New York’s court threw out its first compensation law.
Freedom Safety is a veteran-owned safety management and consulting firm serving contractors across Texas and Oklahoma. Want to know where your safety program stands? Get a free safety program review, email Info@FreedomSafety.net, or call (972) 413-8635.