How Workers’ Compensation Leaders Can Control Costs in 2027

Lower injury frequency offers a welcome advantage, but carriers still need to manage the cost and complexity of the claims that remain.

For workers’ compensation leaders planning for 2027, there are three connected priorities that are emerging: Understanding what drives higher claim costs, addressing barriers to recovery earlier, and making AI a more effective part of claims operations.

Claim Cost Trends

According to NCCI’s preliminary estimates, lost-time claim frequency in NCCI’s data states declined 2% in accident year 2025, while medical and indemnity costs per lost-time claim each increased 4%. Those estimates reinforce the importance of managing severity alongside frequency.

Medical inflation explains only part of that pressure. NCCI’s 2026 State of the Line analysis shows that both higher prices and changes in medical utilization are contributing to cost growth. For claims leaders, that means examining the services being delivered, the complexity of the underlying injuries and the length of treatment, alongside negotiated rates.

Provider performance deserves the same broader assessment. A March 2026 Workers Compensation Research Institute (WCRI) study, which matched comparable claims across 34 states, found that in-network care was associated with earlier treatment, lower costs and shorter temporary disability. The study covered claims with more than seven days of lost time.

“Claims leaders need to understand what they are getting for their medical spend,” says Ron Kifer, SVP, Insurance, at Auriemma Roundtables and moderator of the Workers’ Compensation Roundtable. “Negotiated savings are one measure. Access to care, recovery progress and the total cost of the claim give you a much fuller picture of value.”

Comparing similar claims by injury, jurisdiction and treatment stage can help carriers identify where spending reflects necessary care and where delays or duplicated services warrant closer review.

Addressing Barriers to Recovery Earlier

The consequences of a workplace injury depend on more than the diagnosis. WCRI’s research on knee and shoulder rehabilitation identifies fear of movement, poor coping skills and low mood as factors that can affect recovery. These findings support giving psychological barriers greater attention within the management of physical injury claims.

“When a claim stalls, you need to understand what is holding up recovery,” says Kifer. “An employee may be waiting for care, uncertain about what comes next or unable to return to the duties their employer has available. The response needs to address that specific obstacle.”

Return-to-work planning should reflect the individual’s recovery, job demands and available accommodations. Claims teams can work with employers and treating providers early to establish feasible options and revisit them as an employee’s functional abilities change. Evaluating progress through functional recovery and a sustained return to work can help leaders assess whether their programs are supporting lasting improvements.

Turning AI Into Measurable Claims Improvements

AI and predictive analytics remain relevant to both cost control and recovery. NCCI’s work on claims technology highlights opportunities to improve triage and staff allocation, while emphasizing data quality and human involvement. For 2027, carriers can build on those applications by defining exactly which decisions a tool should support and how its value will be measured.

A model that flags a potentially complex claim, for example, needs to connect to a clear next step. That might mean an experienced adjuster reviews the file or a clinical professional assesses whether additional support is appropriate. Leaders can then evaluate whether the alert prompted useful action, how often it created unnecessary work and whether outcomes improved across comparable claims.

“AI should give adjusters more capacity to make sound decisions and support injured workers,” says Kifer. “The business case needs to account for time spent reviewing and correcting the output, then show how the remaining time improves claims handling.”

Oversight is also becoming more concrete. In 2026, the National Association of Insurance Commissioners has been developing and piloting tools to help regulators examine insurers’ AI use, governance and risk controls. That work reinforces the need for carriers to understand vendor models, protect sensitive information and document how people review consequential decisions. Technology investment and operational accountability belong in the same plan.

These priorities give workers’ compensation leaders a practical agenda for comparing approaches with peers: how to evaluate medical spending, support recovery and determine whether technology is improving claims performance.

About Auriemma’s Workers Compensation Roundtable

Auriemma Roundtables’ Workers’ Compensation Roundtable brings together workers’ compensation leaders to share practical approaches to controlling claim costs, strengthening operations and improving recovery outcomes. Through candid peer discussions, members explore medical cost management, complex claims and litigation, AI and predictive analytics, vendor and TPA oversight, and talent development. The forum helps leaders compare approaches, evaluate performance and bring fresh thinking to the decisions shaping their claims organizations.

To learn more and to get involved, contact Ron Kifer.