Mid-Year Check-In: IRMI’s 2025 Workers’ Comp Watchlist Highlights Key Shifts
As we pass the halfway mark of 2025, the workers’ compensation landscape is evolving rapidly—and not just in cost. The July update from the International Risk Management Institute (IRMI) outlines 20 key issues shaping the industry this year, with several themes rising to the top: medical inflation, mental health, AI adoption, and the erosion of exclusive remedy protections.
For brokers, employers, and claims professionals, these trends are more than theoretical—they’re reshaping how programs are designed, managed, and litigated.
Medical Inflation and Catastrophic Claims
IRMI and Carrier Chronicles both report that medical inflation is outpacing general inflation, especially in catastrophic injury claims. Advances in trauma care and longer life expectancies are driving up long-tail costs. Meanwhile, state fee schedules are being revised to reflect rising provider costs, which could further increase claim severity.
“We’re seeing never-before-seen levels of severity,” said Mark Walls of Safety National. “Cost management and claims handling strategies are more important than ever.”
Mental Health Claims and PTSD Presumptions
Mental health continues to gain ground in workers’ comp. IRMI notes that PTSD presumption laws—once limited to first responders—are expanding to broader workforces in states like Connecticut and New York. This shift introduces new claim types and longer-tail liabilities, especially in high-stress industries.
Employers are advised to review their policies and ensure they’re prepared to handle non-physical injury claims, which often require different documentation and treatment protocols.
AI and Predictive Analytics in Claims Management
Artificial intelligence is no longer a future concept—it’s here. According to a June 2025 study by the Workers Compensation Research Institute (WCRI), AI is being used for:
- Claims triage and intake automation
- Medical bill review and fraud detection
- Predictive reserving and litigation risk forecasting
These tools are helping carriers and TPAs improve accuracy, reduce cycle times, and proactively manage high-risk claims.
Exclusive Remedy Erosion: A Legal Shift to Watch
One of the most concerning trends flagged by IRMI is the erosion of exclusive remedy protections. Courts in states like Pennsylvania and Virginia have allowed civil suits to proceed in cases traditionally covered by workers’ comp—such as workplace violence or employer negligence.
This legal shift could expose employers to dual liability: both a comp claim and a civil lawsuit. Employers should review liability coverage and employer practices to mitigate exposure.
What Employers Should Do Now
- Audit claims data for mental health and catastrophic injury trends
- Evaluate AI tools offered by carriers or TPAs for triage, fraud, and reserving
- Review legal developments in your state regarding exclusive remedy
- Educate HR and safety teams on evolving claim types and documentation needs
Final Thought
IRMI’s mid-year update is a reminder that workers’ compensation is no longer just about slips and falls. It’s about mental health, litigation risk, and leveraging technology to stay ahead. Employers who adapt now will be better positioned to manage costs and protect their workforce in the second half of 2025 and beyond.
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