5 Issues Redefining Workers’ Compensation

The workers’ compensation landscape continues to evolve as claim complexity, regulatory pressures, and emerging technologies reshape how organizations manage risk. As insurers, employers, and risk managers prepare for 2026, understanding these trends will be critical to supporting injured workers’ recovery while controlling costs.

“Workers’ compensation trends affect more than claims outcomes. They influence access to care, workforce stability, and the cost of doing business,” said Mark Walls, Chief Marketing Officer at Safety National. “Operational success will increasingly depend on a holistic approach that accounts for early intervention, responsible and thoughtful use of technology, and planning for emerging risks.”

Insurance industry professionals will want to closely monitor these trends impacting workers’ compensation in 2026.

Thinking Beyond Physical Injury in Claims

Mental health conditions are increasingly recognized as barriers to recovery for an injured worker. Discussing mental health barriers during an early claim assessment can help provide stronger insight into recovery needs and potential obstacles. Additional support, such as assigning a behavioral health specialist and recommending solutions available through employee benefits or community resources, can further aid recovery.

Consequences of Regulatory Overreach

Overregulation continues to create significant challenges for businesses and risk managers. In-state physician licensing requirements, which were temporarily waived during the pandemic, improved access to care, but those requirements have since been reinstated. Similar regulatory friction exists for claims professionals, particularly in the handling of in-state workers’ compensation claims. While well-intentioned, these regulations can fail to keep pace with technology, market realities, and evolving risks.

AI-Centered Business Transformation

Fluency in AI is becoming essential for organizations adapting to current challenges. When paired with user-centric design, AI can drive transformation by improving efficiency while still relying on employees’ critical thinking. Organizations that hesitate to adopt automation risk falling behind, especially as time savings can be reinvested in innovation.

Physician Dispensing and GLP-1 Medications

In jurisdictions where permitted, physician dispensing of medications is increasing. This practice bypasses pharmacy benefit manager (PBM) pricing controls and contributes to higher overall claim costs. At the same time, GLP-1 prescriptions are rising, with utilization expected to grow significantly following FDA approval of the first GLP-1 pill.

Medical Inflation Pressures

Medical inflation in workers’ compensation has historically lagged behind broader healthcare inflation due to fee schedules, but those pressures are now clearly emerging. The National Council on Compensation Insurance (NCCI) reported a 6% increase in both indemnity and medical claim severity in 2024, while the Workers’ Compensation Insurance Rating Bureau (WCIRB) in California noted a 9% increase in medical costs. Importantly, this is not solely a cost-per-service issue; utilization of medical services is increasing as well.