Workers' compensation is getting harder. Rising medical costs, complex claims, talent shortages, fraud, and stringent regulations that vary by province are all contributing factors. And at the centre of it all: medical records that take too long to review.
The numbers
73% of healthcare providers report increasing claim denials in 2024 (Talli Insights) — up from 42% in 2022. Administrative burden from denials costs the healthcare system $19.7 billion annually.
Health insurers process about three billion medical claims annually, and approximately 70 percent of denials are overturned and paid (Premier). That's billions spent arguing over claims that should have been approved initially.
For workers' comp specifically, the good news: the workers' comp sector achieved 86% combined ratio in 2024, indicating strong profitability. But profitability depends on efficient claims processing — and that's where most organizations struggle.
Where AI fits
A 2023 workers' compensation survey by Risk & Insurance found that 61% of respondents reported benefits from newly implemented AI and machine learning tools for claims processing.
The impact shows up in specific ways:
- Rapidly identifying comorbidities and primary diagnoses
- Tracking condition progression across longitudinal records
- Flagging high-litigation-potential cases for senior review
- Detecting anomalies in procedures and treatments
Simple claims — which make up the majority of volume — get processed faster. Complex claims get the expert attention they need.
The talent problem
The U.S. insurance industry could lose around 400,000 workers through attrition by 2026, according to Bureau of Labor Statistics projections. And burnout is rampant — one survey found 82.5% of workers in finance and insurance reported burnout.
That's not sustainable for claims teams already stretched thin. AI doesn't replace adjusters. It handles the tedious work — summarizing records, flagging key details, deduplicating files — so experienced professionals can focus on decisions that require judgement.
Fraud detection is improving
The anti-fraud technology sector has grown to $7.17 billion in 2025, projected to reach $22.78 billion by 2030. Investment in fraud prevention returns $7 for every dollar spent.
AI helps identify inconsistencies across medical and legal documents, flag unusual patterns, and surface discrepancies that manual review would miss.
How OctopusLM helps WCB claims teams
We built OctopusLM specifically for Canadian workers' compensation workflows.
- Extract diagnoses, treatments, and causation factors with page-level citations
- Track condition progression across multi-year records
- Identify pre-existing conditions and comorbidities
- Generate structured summaries for IME physicians and case managers
- PIPEDA compliant. Enterprise-grade security.
Sources:
Premier Inc. Claims Adjudication Survey 2025
Talli AI Claims Industry Statistics 2025
Risk & Insurance Workers' Compensation Survey 2023