6 Trends Shaping Workers’ Compensation in 2025

Rising medical costs on catastrophic workers’ compensation injury claims continue to be a substantial industry concern, creating never-seen-before levels of severity despite the industry’s reputation as the most stable property and casualty insurance line.

“Prioritizing cost management and claims handling strategies is more important than ever,” said Mark Walls, Vice President of Client Engagement at Safety National. “Injury frequency and severity are changing with increases in shorter-tenured and retirement-age employees in the workforce. Their associated claims are among the highest in cost and require more attention to prevent further derailing.”

Insurance industry professionals will want to closely monitor these trends impacting workers’ compensation in 2025.

1. Increasing Claims from Labor Shortages

Studies show that high rates of overtime and absenteeism in a workforce can lead to increased claim frequency, which is likely associated with fatigue and over-exertion. This is a growing challenge as employers try to maintain the same productivity levels despite employing fewer people.

2. Eroding Exclusive Remedy

Multiple high-profile cases last year involved plaintiffs pursuing civil litigation in workers’ compensation matters. This includes workplace shootings, allegations of defamation, and disputes over unpaid medical bills. While exceptions are still rare, there is increasing evidence that the courts are willing to give plaintiffs the opportunity to prove their case rather than dismissing on motion for summary judgment.

3. Rapidly Growing Aging Workforce

The number of employees over the age of 65 in the workforce is growing rapidly, and workers over the age of 75 are the fastest-growing group. When injured, older workers tend to have more severe injuries and slower recovery times.

4. Rising Medical Inflation

Due to fee schedules, medical inflation in workers’ compensation tends to lag behind regular inflation. However, many states are adjusting their fee schedules because of the increasing care costs. A growing shortage of medical providers will only make this worse.

5. Increasing Catastrophic Claims Cost

While catastrophic injury claims are rare, they are incredibly expensive, and their costs are dramatically increasing. This is driven by higher accident survival rates, higher costs for new medical care, and increased life expectancies for seriously injured workers.

6. Expanding Mental Health Claims

Many states have very limited compensability when it comes to mental health claims where no physical injury is involved. Recently, post-traumatic stress disorder (PTSD) presumption laws have been passed for first responders. Connecticut and New York expanded those laws to cover the entire workforce in the last two years. Since these are new claims in the workers’ compensation system, it will take years to understand their full impact on increasing costs.