How to manage workers’ compensation insurance more effectively in 2026

Judicious adoption of AI-powered technology can help insurers deal with a complicated and rapidly evolving risk and claims landscape, writes Adrian Lewis.

In Australia, maintaining workers’ compensation insurance that covers all employees for injuries and illnesses sustained on the job has long been non-negotiable for diverse businesses and organisations. The peace of mind that comes from knowing one’s medical expenses will be covered and wages replaced if something happens at work is impossible to quantify. Almost as difficult to quantify in today’s times is the risk associated with working in specific industries, jobs, and organisations. It’s become a highly complex undertaking, but one that regulators and underwriters must grapple with to determine the correct level of coverage, benefits and, most importantly, what it should cost them.

The changing nature of workplace risk

Naturally, some occupations are inherently more dangerous than others. According to Safe Work Australia, 59 of the 188 deaths at work in this country occurred in the transport, postal, and warehousing sectors in 2024. Agriculture, forestry, and fishing accounted for 20 deaths, while the construction sector accounted for 15.

While every fatality is a human tragedy, stringent occupational health and safety measures have helped drive these statistics down in recent decades. From mandatory hard hats, steel-capped boots, and safety harnesses to site inspections, regular safety training sessions, and kill switches on machines, state and federal governments, industry organisations, and employers have put in the hard work to prevent accidents and make workplaces across all industries safer by design.

Mental health injuries in the spotlight

While the incidence of traumatic injuries may be declining, another form of injury has been in the spotlight. Mental health and psychological injuries – either as a standalone injury or a component of an existing claim – have shifted with significant changes across all industries.

For example, those related to silicosis have skyrocketed. According to Monash University research, in Victoria, there were 482 claims received between 2015 and 2022, compared with just 18 claims in the previous eight-year period.

While mental health injuries may be invisible, the costs are not. According to Safe Work Australia:

• Mental health conditions accounted for 9 per cent of all serious workers’ compensation claims, a 36.9 per cent increase since 2017–2018.
• The median time lost was more than four times greater than that of all physical injuries and illnesses (2020–21).
• The median compensation paid for mental health conditions was more than three times greater than that of all physical injuries and illnesses.
• Workers with claims for mental health conditions experienced poorer return-to-work outcomes and were more likely to experience stigma from colleagues and their employers.

Cover for gig economy workers

Additionally, the increase in gig economy jobs has opened a whole new frontier of complexity and risk.

Even as unions and gig workers struggle at the Fair Work Commission to secure a modicum of the rights that regular employees enjoy, regulators and insurers are having to develop reliable, up-to-date models for the non-traditional working patterns enabled by platforms such as Airtasker and Uber.

Tools to make the task easier

Doing so can be particularly challenging for insurers that are still operating in manual or semi-manual mode; reliant on legacy solutions designed to cater to traditional risks, employment models, and patterns of work.

However, the right tools can make it a considerably easier proposition. That’s where artificial intelligence (AI)-powered general insurance technology has a vital role to play. If you choose the right platform, your firm will be able to manage policies, claims, and the underwriting process more efficiently and profitably.

Automating processes, streamlining workflows, and unleashing the power of data analytics will enable your teams to develop a more comprehensive understanding of Australia’s modern diverse workplace ecosystem, the risks involved, and the insights on how they should be managed.

Setting your firm up for a stronger future

The management of all components of the workers’ compensation life cycle, from understanding and working with risk management frameworks, developing, and maintaining portfolio-level claims strategies, AI-powered insurance technology can support your workers’ compensation teams to navigate Australia’s evolving industrial landscape with confidence. If that’s a priority for you in 2026 and beyond, mission-critical technology belongs at the heart of your IT stack.

Adrian Lewis is the business consulting practice director at Guidewire Software.