The New Era of Workers’ Compensation: Managing Complexity in a Changing World

By Irina Simpson | Executive Vice President of Workers' Compensation, Gallagher Bassett

Talent, mental health and access to care converge

Workers’ compensation has entered a new phase of complexity. In 2026, claims outcomes are increasingly shaped not by a single trend, but by the interaction of multiple structural pressures across the claim lifecycle.

Constrained access to care, expanding mental health exposure, ongoing regulatory changes and persistent talent shortages inside claims organizations are converging to make claims more difficult to manage, more resource intensive and less predictable across portfolios. Together, these forces are raising expectations for the claims profession and influencing how claims evolve, how long they remain open and how superior outcomes can be achieved at scale.

When access to care shrinks, claims expand

Access to medical care has become a structural risk that directly influences workers’ compensation claim duration and total cost as hospital closures and the consolidation of provider networks and larger systems reduce available treatment options, particularly in rural areas.

Over 140 rural hospitals closed in the U.S. between 2005 and 2023, and dozens more are currently at risk. At the same time, consolidation has given large health systems more leverage to opt out of PPO networks, further limiting access for injured workers and increasing pressure on out-of-network costs.

For claims, delayed appointments, longer travel distances and fewer specialty options increase the likelihood that relatively straightforward injuries become complex, prolonged and costly. Limited access does not simply slow treatment; it increases uncertainty and stress for injured workers, which can affect engagement, recovery timelines and return-to-work outcomes.

When mental health is overlooked, claims escalate

Historically, the workers’ compensation industry focused primarily on physical injuries. Today, claims professionals are expected to evaluate the injured worker as a whole person, including behavioral health factors that influence recovery. Anxiety, depression and trauma frequently accompany workplace injuries, particularly when recovery is delayed or access to care is limited.

Mental health conditions are now cited as the number one driver of workers’ compensation claim complexity. A 2025 study of more than 930,000 claims revealed that comorbid conditions, including mental health issues, raise medical and indemnity costs and lengthen temporary disability, versus claims without complicating factors.

In bellwether states such as California, expanding definitions of compensability, growth in cumulative trauma claims and changes in presumption laws are increasing claim complexity and severity. As behavioral health factors become more embedded in these claims, insurance carriers and employers face increased uncertainty around claim development and outcomes. Historical benchmarking and advanced analytics provide a critical counterbalance, enabling earlier identification of risk factors, more informed reserving decisions and targeted intervention strategies that can help limit escalation and improve predictability and worker outcomes across portfolios.

It is essential to treat the whole person and ensure a seamless, coordinated journey through various stages of care. Early intervention, timely clinical engagements and integrated medical solutions provide personalized, holistic care that addresses physical, mental and emotional well-being, helping to prevent complications and promote better outcomes. Furthermore, this comprehensive approach enhances the quality of care, shortens recovery time and restores health more efficiently, ultimately improving the overall patient experience. 

When claims capacity tightens, outcomes suffer

Claims outcomes ultimately depend on the professionals managing them, and their capacity is becoming a growing constraint across the industry. An aging workforce and accelerating retirements are reducing the number of experienced claims professionals available to manage an increasingly complex workers’ compensation claims environment.

At the same time, claims involving delayed access to care, behavioral health considerations and older workers with comorbid conditions require experience and clinical judgment. They also require time. When claims teams are stretched thin, the risk of delayed decision-making, inconsistent communication and escalation increases — all of which can directly affect duration, severity and litigation exposure.

By building a strong pipeline of skilled professionals, claims and risk management partners will be better equipped to help carriers and employers achieve superior outcomes. At Gallagher Bassett, we are committed to addressing industry-wide talent gaps by investing in our team. Our INVEST (Industry Navigation, Values, Education, Skills and Training) Emerging Talent Program is a transformative initiative designed to cultivate the next generation of claims professionals in the risk and insurance industry. It offers a unique combination of hands-on experience, real-world business exposure and guided mentorship. Our goal is to nurture the next generation of exceptional claims professionals who not only adopt traditional processes but also leverage new tools, technologies and expectations to drive excellence in an evolving industry.

What claims leaders should prioritize as complexity rises

The traditional claims operating model is under strain. To reduce administrative burden on their teams, leaders should identify where experienced professionals are spending time on work that does not require judgment and invest in tools that streamline these tasks, improve decision support and help organize, prioritize and optimize how the work is done. Enhanced claims benchmarking, predictive insights tools and key claim indicators can help flag claims with elevated exposure risk, emerging complexity, developing severity or a higher likelihood of escalation.

These technologies are most effective when designed to support — not replace — claims professionals, offering consistency, supporting the quality of interactions with injured workers, employers and partners, and providing claims professionals an opportunity to perform meaningful work, rather than focus on administrative tasks.

The path forward

As complexity reshapes the workers’ compensation market, making outcomes harder to manage and execution more demanding for claims organizations, strong performance will be driven by how effectively people, processes, data and insights are aligned. It is essential for partners to fully understand the evolving dynamics of their clients’ environments. Whether it involves navigating tightening budgets, prioritizing cost management, addressing the impact of tariffs or adapting to fluctuations in job counts, collaboration ensures tailored solutions that align with their unique challenges and objectives.

For carriers, employers and their partners navigating this shift, partnership with proven claims experts who understand how complexity develops and how to manage it proactively can provide critical stability.

Gallagher Bassett is a leading provider of claims management and risk services, delivering tailored solutions across workers’ compensation, liability and property programs. With operations in multiple jurisdictions and deep industry expertise, Gallagher Bassett partners with insurance carriers and employers to manage complex claims environments, improve outcomes and support injured workers throughout the claims lifecycle.