Could artificial intelligence have helped workers compensation insurers avoid losing billions from the opioid crisis? Long burdened by slow, manual processes, carriers in this sector face rising expectations for digital efficiency, faster claims processing, and better outcomes for injured workers and employers alike. Now there’s growing evidence that the level of transformation enabled by AI—and a healthy dose of human empathy—may be more profound than many realize. To understand why, let’s look at today’s top challenges and the opportunities afforded by advances in technology.

Why Workers Compensation Is Ripe for Revolution

Building on nine straight years of underwriting profits and an average combined ratio of 91%, workers compensation continues to deliver solid results for insurers. But as Swiss Re points out, the sector faces mounting pressures, including:

Shifting Workforce Demographics: The youngest baby boomer just turned 60, and by 2033, 25% of US workers will be 55 or older. As older employees dominate the labor pool, carriers face increasingly complex injury types, prolonged recovery timelines, and continued medical cost inflation.

Increasingly Complex Injuries: Mental health claims, comorbidities, and “mega claims” (including catastrophic injuries costing more than $5 million) are on the rise, adding layers of complexity to claims management. Meanwhile, claims with mental health components are 2.5 times more expensive than those without.

Rising Regulatory Hurdles: The increasingly intricate regulatory mandates created by state-specific rules are only growing more complexand ever more cumbersome to navigate.

Technology will be critical to enabling new approaches that address these and a growing list of other challenges to accelerate return to work (RTW), and, when possible, prevent injuries from occurring in the first place. AI combined with data analytics and advanced automation technologies backed by a modern cloud infrastructure are widely seen as critical to the task.

AI as the Catalyst for Claims Transformation

Along with advances in automation, the ability of generative and new forms of agentic AI to instantly analyze and operationalize vast amounts of structured and unstructured data is rewriting the rules of claims management in workers compensation. A few of the most promising opportunities include the following:

Automated Low-Complexity Claims

New forms of digital First Report of Injury (FROI) will increasingly connect to automated systems that leverage AI to triage and resolve straightforward claims with minimal human intervention or route a claim to the appropriate adjuster. This can help reduce manual, redundant tasks and free adjusters to manage more complex claims requiring a higher level of human empathy during what can be an extremely challenging time for claimants. According to a Deloitte survey, 80% of workers compensation claims could be fully automated. And a 2025 Risk & Insurance survey found that nearly 60% of workers compensation professionals ranked this among the most important technological approaches shaping the future of the sector.

AI-Enhanced Case Management

When integrated to a cloud-based insurance platform like Guidewire, generative AI-based solutions like those from CLARA Analytics, DigitalOwl, and others can instantly summarize what are often voluminous case notes, medical reports, and conversations between the injured worker, employer, case managers, and medical providers. This helps adjusters quickly understand the status of claims, anticipate recovery times and RTW probabilities, and better understand a claimant’s unique needs. Leveraging this information, adjusters can coordinate activities and keep action plans on track.

Insurtech Integration to Prevent Claims 

Together with API-connected core systems, AI can also assess internal and external data sources to recommend early interventions to prevent complications. By integrating data from remote technologies from insurtechs like Kinetic, carriers can potentially reduce injury rates by up to 58% while cutting claims costs by up to 54%. Meanwhile, as CIO Brad Lontz reported in a recent interview, carriers like CopperPoint Insurance couple AI with on-site video monitoring to spot unsafe work activities and other hazards in order to protect workers and prevent injuries from ever happening in the first place.

Patterns of Abuse: The Power of Advanced Medical Insights

Beyond just the particulars of a specific set of claims, AI’s ability to interpret medical records, identify patterns, and predict treatment outcomes could have a seismic impact on the workers compensation sector. According to CLARA Analytics CEO Heather Wilson, for instance, this technology could have detected and helped shut down abuses that led to more than 645,000 overdose deaths stemming from the opioid crisis in the US that began in the 1990s. In addition to the toll on families and loved ones, the economic losses associated with this epidemic topped $4.5 trillion from 2017 through 2020.

As much as 75% of employers surveyed by the National Safety Council report being directly affected by opioids. Among other things, workers with substance use disorders take nearly 50% more days of unscheduled leave than other workers—with CDC analysis showing the highest mortality rates in construction, mining, and other high-risk industries. By some estimates, insurable losses from 2000 through 2030 could exceed $230 billion.But the complexities that the overprescription of opioids has injected into the recovery journey for injured workers suggest that’s just scratching the surface.

As Wilson tells me in a recent episode of the InsurTalk podcast, her company has leveraged AI to analyze client carriers’ medical bills, treatment details, and prescription information to identify medical providers overprescribing opioids and the associated medical outcomes. By removing those providers, sometimes above initial objections from claims teams, carriers have significantly reduced costs and improved claims outcomes. “That’s the beauty of being able to have AI detect patterns,” she says. “Ultimately the outcomes improved…and the adjusters began to trust the AI.”

Operating at the Intersection of Innovation and Empathy

Embracing AI and other technologies, workers compensation carriers can transform claims management from reactive to proactive—ensuring optimal outcomes for injured workers and improved financial performance.

Best of all, this is just for starters. Watch the video below for a bigger-picture view of the technologies and approaches shaping the future of workers compensation—and four key requirements for making the most of them.