Generative AI Reshapes Workers’ Compensation as Insurers Race to Transform Operations

Workers’ compensation insurers confront a critical inflection point as generative AI adoption accelerates across the industry, with 93% of workers’ comp carriers surveyed saying medical cost inflation will have the greatest impact on their performance over the next five years, according to a joint report from Guidewire and PwC.

The workers’ compensation market faces a convergence of challenges that threaten to upend the traditional operating model, according to the report. Beyond spiraling medical expenses that have outpaced baseline inflation since 1982, carriers must grapple with an aging workforce that threatens to drain institutional expertise. The impending retirement of seasoned underwriters and claims adjusters creates a significant talent gap precisely when the industry faces increasingly complex claims driven by rising mental health issues and expanded litigation exposure.

The landscape is further complicated by regulatory fragmentation. As state-based monopolistic markets transition toward open competition, carriers must navigate a fragmented patchwork of local regulatory requirements. These compounding pressures have intensified the modernization imperative for the industry, the report said.

GenAI Adoption Surges, but Benefits Remain Inconsistent

Workers’ compensation insurers are responding aggressively to these headwinds. A Guidewire survey in 2025 found that 87% of carriers are building or planning to build out AI platforms, while 60% have defined strategies either enterprise-wide or at the business unit level.

However, adoption and results remain uneven. Only 56% of carriers with a defined strategy have deployed AI models in pilot or production environments. When it comes to realized benefits, 53% have achieved some anticipated improvements, while approximately 30% have yet to reach their benefit goals.

Universal among respondents is the expectation of operational efficiency gains through AI, but the industry recognizes deeper transformational potential. Sixty percent of insurers anticipate improved return-to-work outcomes, signaling recognition that technology can reshape how carriers serve injured workers.

Five Forces Will Reshape the Industry Through 2030

Forward-thinking carriers are positioning themselves around five major themes that will define the next era of workers’ compensation, according to Guidewire and PwC:

• The industry will shift from process-centric to worker-centric models. Generative AI enables personalized case management, real-time intelligence extraction from documents, and round-the-clock support for injured workers—moving beyond the institutional, process-driven approach that has dominated since the 1900s.
• AI-enabled workflows will drive digital modernization through intelligent claims triage, injury analysis, proactive intervention, and decision support. Leading carriers are establishing AI centers of excellence to institutionalize these capabilities across underwriting, claims, and operations rather than treating AI as a one-off pilot program.
• GenAI will help capture and restructure knowledge, democratizing access to institutional knowledge that traditionally has resided with veteran underwriters and adjusters. This trend not only will assist carriers navigating the generational transition, but also will enable dynamic learning and break down siloed resources, according to the report
• The industry must transition from traditional loss transfer toward proactive risk management. Generative AI can analyze unstructured data to identify hidden vulnerabilities before injuries occur, accelerate claims processing to recommend tailored recovery plans, and convert periodic safety reviews into continuous, real-time monitoring processes.
• Ecosystem partnerships will become essential. Third-party innovators are filling critical gaps—from AI-driven bill review platforms addressing medical cost and mental health claims to expertise embedding tools helping carriers bridge the knowledge gap left by departing veterans, and predictive analytics platforms flagging litigation exposure across complex regulatory environments.

Success will depend on how quickly carriers move beyond viewing generative AI as an efficiency tool and begin leveraging it as a strategic lever to fundamentally reimagine the injured worker experience and enterprise performance, according to the report.

View the full report here. &