Smarter tools, better outcomes: How AI-powered technology will help insurers better manage psychological injury claims in 2026
By Adrian Lewis (pictured), Director, Business Consulting Practice, Guidewire
The right platforms and processes can enable claims teams to keep on top of burgeoning caseloads.
Australian workers compensation schemes had their genesis in the early 1900s, at a time when claims invariably arose from physical injuries. A century later, we live in less dangerous times, thanks to comprehensive occupational health and safety regulations designed to minimise the risk of incidents and accidents on the job.
However, workers compensation schemes around the country have recently been inundated with claims of another type.
According to RGA, since 2018 – 2019, there have been multi-year increases of 30 to 60 per cent in mental health and psychological claim numbers across all states and territories in Australia. New Zealand has recorded multi-year increases of nearly double (approximately more than 93%) the rate of psychological distress in young people (15 – 24) since 2016 – 2017, with 22.9% reporting high distress compared to 7.4% five years prior.
It’s a trend that has raised alarm bells for state regulators in Australia, sending them scrambling to tighten eligibility rules for higher cost benefits, by raising impairment thresholds and narrowing long-term benefit eligibility.
At the same time, we’ve seen these bodies up their investment in a range of preventative measures – think workplace mental health programs and new psychosocial Occupational Health and Safety (OHS) regulations – in an attempt to minimise the premium hikes hard pressed businesses can ill afford to accommodate.
Surging caseloads for third-party claims managers
State regulators aren’t the only ones seeking ways and means to manage this unprecedented claim surge.
The insurers charged with managing claims on behalf of those entities and their schemes are stretched ultra-thin, courtesy of ballooning workloads. It’s partly because of the sheer numbers but also because psychological and mental health claims are typically more complex and expensive than injuries such as broken bones and slipped discs.
When harm is invisible, assessment and management become trickier while recovery tends to be less linear and far less predictable. Insurers are required to frequently draw on the services of external specialists, including psychologists, psychiatrists, and counsellors.
As a result of this complexity, even experienced claims specialists need manageable case loads that are monitored to ensure optimal outcomes for the injured person and signs of burnout/fatigue for the claims specialist.
Muddling along in manual mode
The challenges can be exacerbated for insurers that operate in manual or semi-manual mode.
A surprising number continue to rely on spreadsheets, legacy platforms, and even paper-based systems to gather claimants’ data, engage with treating practitioners and stakeholders, and track cases and claims, from lodgement to resolution.
This makes for a slower claims process and limited visibility into the status of individual claims and caseloads.
Identifying high-risk cases in real time is extremely difficult, and swiftly sourcing the specialist resources and skillsets needed to progress them effectively and expeditiously is equally challenging.
Tools to make the task easy
That’s where AI-powered general insurance technology has a vital part to play. Select the right platform and your organisation will be able to add efficiency, rigour, and enhanced oversight to every stage of the psychological and mental health claims journey.
Automating processes, streamlining workflows, enabling secure digital communication between stakeholders, and harnessing the power of data analytics will enable your claims team to onboard claims faster and comply with all aspects of scheme requirements. Having complete visibility over cases and caseloads will allow team leaders to flag and focus on high-risk claims, and identify when external resources may be required to make progress.
This allows your team to focus on outcomes, rather than on low-value administrative activities, to support employers to get affected employees back to work smartly, safely, and quickly.
Supercharging efficiency and efficacy in the claims department in 2026
Ensuring recovery and return-to-work journeys are as smooth and successful as possible is value-adding work that can enable workers’ compensation schemes, and the insurers that support them, to operate sustainably.
AI-powered general insurance software can assist with this aim. If supporting your claims team to do their best work is a priority for the new year, it’s enabling technology that should sit at the heart of your IT stack.
