Inflation and Workers’ Comp Fraud Trends

August 5, 2025

Author: Clark Fennimore

Workers’ compensation is an important part of company budgets. One consideration in the search for a coverage plan is the fact that workers’ compensation is among many areas of the economy influenced by inflation. In fact, small businesses often have a hard time with the amount of their budget that they have to dedicate to such a plan, particularly when premiums increase to accommodate inflation.

At the same time, many people seek opportunities for financial prosperity in the midst of inflation, leading some to desperate measures in the form of fraud, noted as a crime negatively impacting workers’ compensation, with annual losses in the United States estimated at $310 billion. Sadly, that figure increases over time. In fact, this crime takes forms labeled specifically as provider fraud, payroll fraud, and claimant fraud; these all directly impact workers’ compensation.

One important part of dealing with the financial state of workers’ compensation comes in the form of how an employer provides coverage for employees while mitigating the raising of premiums. First, a “modified duty” policy decreases expenses when used to accommodate an employee who deals with an injury, as litigation becomes less probably as an out come; in fact, disability coverage is contingent on using such an accommodation. Another alternative is providing a system for medical consultation at the workplace, including nurse triage (available over the phone).

Benefits of this system include quick consultation concerning an injury, with less expense to the employer, as well as the lack of a need for compensating the employee for time spent in seeking care away from the workplace. Some special types of coverage policies can also help with cost-effectiveness.

Another part of dealing with the financial state of workers’ compensation, including in the midst of inflation, is preventing fraud. One issue is that technology has opened opportunities for people to commit fraud. A strategy for preventing it also involves technology: the use of predictive analytics to monitor claims in quantities beyond the ability of adjusters, as a tool in finding cases of fraud. Because such cases can be discovered more quickly than they could be without this resource, financial losses due to fraud can be decreased, both for companies dealing with workers’ compensation and for companies that purchase plans. However, there is also a possibility that companies may offer coverage for client companies at an initially competitive premium level while planning to increase the premiums later.

While this has been identified as another potential form of fraud and of making money in the midst of inflation, employers can look for coverage from companies that do not use such practices to increase their profits; a covered employer can then avoid be a victim of fraud in this form.

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