For small businesses, securing affordable workers' compensation coverage has always been an uphill battle—especially in high-risk industries. While some may assume that options are scarce, Katherine Antonello (pictured), president and CEO of EMPLOYERS, insists that’s not entirely the case.
That doesn’t mean it’s easy. Smaller businesses often find themselves priced out or struggling to meet strict underwriting criteria.
“I do believe market availability exists,” Antonello said. “Carriers that write high-risk industries often have highly experienced and dedicated resources and tools that are very specific to those types of risks.”
But even if coverage is available, cost remains a major concern. Inflationary pressures, rising claims costs, and increasing operational expenses are squeezing small businesses. And while medical price inflation in workers’ compensation has been relatively stable, Antonello acknowledged the financial strain.
“Claim costs—it’s a topic that the industry cannot ignore,” she said. “Frequency has been dropping for decades, but we have to keep an eye on severity and appropriately price for it.”
One factor contributing to driving up claim costs is fraud and abuse. The workers’ comp industry is particularly vulnerable, with multiple avenues for fraudulent activity—whether it’s provider fraud, payroll fraud, or claimant fraud.
“The Coalition Against Insurance Fraud estimates insurance fraud costs the US about $310 billion a year,” Antonello said. “And unfortunately, the number continues to rise.”
While combating fraud has always been a challenge, the digital age has made it easier for bad actors to game the system. That means taking a proactive, rather than reactive, approach to fraud detection. Predictive analytics can flag suspicious patterns across thousands of claims—something no single adjuster could do manually. By layering a human touch on top of data-driven insights, insurers can identify fraud while preventing minor injuries from escalating into costly, long-term claims.
“Anyone can essentially sit at their computer and create false bills and file false claims,” she said. “The industry can always do more. If we can reduce the drain on the system caused by fraudulent claims, that frees up time to provide timely care to legitimately injured workers and lowers the cost of workers compensation.”
Beyond fraud, regulatory uncertainty remains a persistent challenge in the insurance industry. One of the most pressing concerns is artificial intelligence (AI), which is rapidly reshaping underwriting, pricing models, and risk selection.
“The speed of AI’s evolution requires regulators to stay ahead of the changes,” Antonello said. “There is uncertainty about how AI-driven decision making might impact market competitiveness between carriers and/or lead to inappropriate risk selection disparities.”
In addition, economic pressures such as inflation and uncertainty around future medical costs are also looming issues.
“It's crucial for regulators to find a balance in their approach—ensuring rate adjustments reflect economic realities while avoiding unintended outcomes, such as losing carriers or undermining market stability,” Antonello said.
A prime example of regulatory misalignment? California, which has seen mass insurer withdrawals from California’s property insurance market due to wildfire risks. While not directly related to workers’ comp, the scenario underscores the risks of regulatory inertia, according to Antonello.
“We’ve seen what happens when a lot of carriers exit a state,” she said. “The regulators and legislators need to balance the price sensitivity of the consumer with the solvency pressures the insurance industry can face when rates are suppressed."
Yet, for all the talk about complexity, Antonello doesn’t necessarily believe that workers’ comp is getting more difficult to navigate—at least not in a relative sense.
“Workers’ compensation was already, in my opinion, one of the most complex lines of business to write,” she said. “Because the line is inextricably linked to the economy, drivers of profitability are not easily controlled or mitigated. In addition, its long-tailed nature brings uncertainty around the cost of goods sold, and the statutory benefits provided are a combination of disability insurance and health insurance. For these reasons, it takes significant expertise to successfully compete in workers compensation.”
One key difference between workers’ comp and other insurance lines, according to Antonello, is its statutory nature.
“The benefits are statutorily mandated, so there’s not a lot of flexibility around policy terms and conditions when you’re underwriting,” she said. “The key to success in small business workers compensation is deep expertise, appropriate risk selection, and determining an adequate rate for the risks underwritten.”
