While millions of new hires over the past few years of economic recovery have bolstered the balance sheets of workers' compensation insurers, seismic shifts in the labor force and turbocharged automation may be putting one of the property and casualty industry's biggest premium generators at serious risk of disruption.

Indeed, two existential questions confront insurers that could prompt fundamental changes in their exposure base and business model. First, what is the place of workers' comp in a world where more and more people are likely to lose their jobs to machines, and the very nature of work is changing as a result? Second, are insurers prepared to evolve along with the rapidly changing labor markets they cover?

'Human middleware'

Science fiction is filled with scary stories about robots taking over society, but the challenge is already quite real for workers' comp insurers in a growing number of fields. Consider the case of "virtual" customer service representatives.

I saw a demo recently in which a computer-generated personage reacts to the words a client uses and even their tone of voice — changing expressions and responses to show concern or satisfaction, depending on whether the interaction is making the customer frustrated or grateful. The demo presenter casually mentioned that such programs are destined to replace the majority of what he called "human middleware" — a chilling euphemism for live people doomed to lose their jobs to a computer algorithm.