AI in workers’ comp is smarter, faster and changing the game for agents

Rates keep falling, but premium is flat—In 2025, voluntary market rates dropped another 6%, continuing a decade‑long trend. Meanwhile, payroll growth is back to historical norms, keeping the overall premium base stable rather than expanding.

Medical and indemnity costs outpacing benchmarks—Both medical and indemnity severity are rising faster than their respective cost proxies, driven by higher treatment costs and more frequent care utilization.

Reserves are still strong but slipping—Reserve redundancy declined from $18 billion in 2023 to $16 billion in 2024, the first contraction in years, and a signal that margins are under pressure.

Claim frequency falling, but more slowly—The long-term downward trend in claim frequency continues, but the pace has slowed, and the tailwinds that once powered favorable loss ratios are easing. Even in a profitable line of business like WC, early signals suggest the next cycle may be approaching. Agents who stay vigilant, and aligned with partners who see these signs, will be better positioned to adapt.

The flip side of AI 

Policies may appear identical, but service experience differs. The leading carriers leverage real-time data and intelligent automation, delivering tangible advantages in today’s cost-competitive environment.  Here are some real world examples:

• Before AI, claims processing often lagged.  Now, AI can read reports in seconds, triage them, and issue same-day payments.
• Before AI, there was often guesswork on severity; now, predictive analytics score flag cases and can escalate them for early intervention.
• Before AI, fraud could rear its ugly head at any moment; now, AI can keep tabs on suspicious billing patterns and curb leakage before it starts.
• And, what would often be a lengthy return to work timeline for injured employees is now truncated thanks to AI-guided planning, which can recommend best-fit providers and recovery timelines.

The numbers don’t lie— AI could reduce claims processing costs by up to 30%, automation can cut overall claims processing times by up to 70% and machine learning reduces fraudulent claims by 25%.

Meanwhile, average medical lost-time claim severity has risen 6%, with medical costs accounting for 60% of WC expenses. At the same time, remote worker injury claims have risen by up to 54%. AI supports risk prevention via real-time monitoring, ergonomic assessments and enhanced safety training.

AI also brings immense power, but it doesn’t replace human insight. The best outcomes come when technology augments skilled professionals, with humans being essential to manage complex cases and injured-worker advocacy. Only humans can make judgment calls and nuanced decisions.

AI can’t replace the importance of relationship building and tough communications that only a human can provide. When it comes to return-to-work, only humans can engage with the client to guide them through cultural changes and provide them with safety coaching. Agents should look beyond AI capability, focusing on carrier alignment with client needs.

Loss control and risk services

Loss control refers to the proactive safety support and consulting that a carrier provides to help reduce workplace injuries and claims. This matters because different clients have different needs; some may value hands-on guidance in shaping their safety culture, while others may prefer a more independent approach. Agents should carefully match the carrier’s loss control philosophy with the client’s expectations and risk tolerance to ensure a productive relationship.

Actionable safety data and insights

Carriers often provide benchmarking reports, trend analysis, and other tools that help clients understand where safety improvements can be made. But it’s not enough to simply share data, these insights must be timely, relevant, and easily translated into prevention strategies.

Agents should prioritize working with carriers that not only offer robust data but also deliver clear, actionable takeaways that clients can implement to reduce risk.

Claims management approach

Each carrier has its own style and level of involvement when it comes to managing open claims and guiding return-to-work (RTW) plans. Getting this right is crucial; clients can quickly become frustrated if a carrier is either too hands-off or too intrusive. Agents should take time to understand their client’s preferences around claims handling and align them with a carrier whose claims philosophy mirrors those expectations.

Communication and partnership style

A carrier’s ability to communicate openly and collaborate effectively with both agents and insureds can significantly affect the success of the relationship. When a carrier operates in a “black box” with little transparency, it leads to surprises and breakdowns in trust. Agents should favor carriers known for being transparent, responsive, and proactive in their communication across all stages of the policy lifecycle.

Smart use of technology (including AI)

Today’s most effective carriers aren’t just using AI for automation, they’re leveraging it to drive better outcomes for both agents and clients. This distinction matters because while clients may not specifically ask for AI, they do expect faster claims resolution, fewer errors, and stronger fraud prevention. Agents should ask carriers not just whether they use AI, but how they’re using it to improve outcomes and create measurable value.

Workers’ Comp isn’t standing still, and neither should you. As rates remain soft and cost drivers shift, AI is reshaping the rules of the game. 
Agents who stay informed and aligned with seasoned partners will be best equipped to protect clients and grow in this evolving market.

Jeff Sandy is the EVP of Workers Compensation at Jencap.

See also:

• Most and least expensive states for business insurance
• Can tort reform control insurance costs in the U.S.?
• Insurance customers aren’t seeing the benefits of AI