The workers' compensation market is undergoing a fundamental transformation as workforce models, legal structures and employee expectations shift. These changes are reshaping risk profiles across the country, forcing the industry to adjust to a broad restructuring of how work is performed, classified and covered.

Nowhere is this change more evident than in three emerging pressure points: the hybrid and remote workplace, the growth of the gig economy and the rapid expansion of presumption laws tied to mental health and long-term exposure conditions.

Hybrid Work

Hybrid work environments continue to bring additional challenges to the market. Blurring the lines between personal and work-related injuries, the hybrid work model underscores the need for proactive strategies to manage rising costs and adapt to evolving workplace dynamics.

Employers are now responsible for assessing risk in environments they don't control, while carriers must interpret compensability standards for injuries occurring in kitchens, living rooms or on neighborhood sidewalks during work-from-home days. These ambiguities introduce uncertainty into claims handling and underwriting, often leading to broader investigations, longer claim durations and higher associated costs.

Gig Economy

Layered on top of the hybrid-work challenge is the accelerating growth of the gig economy, which poses its own classification and coverage issues. The blurring of lines between employee and contractor status has created significant coverage gaps and compliance challenges that are still being sorted out.

"When it comes to the gig economy, workers are typically classified as independent contractors and are responsible for securing their own coverage," says Kenny Palmer, area vice president with RPS. "This creates a two-fold issue: First, they're typically excluded from the standard workers' compensation policy; second, when they're responsible for their own coverage, it often leaves them vulnerable with inadequate protection.

A key challenge with these types of remote and gig workers is defining the employment relationship. This open classification becomes especially problematic when determining whether an injury is work related. Establishing compensability can be challenging, requiring consideration of factors such as where the injury occurred, whether it happened during designated work hours and if it was related to job duties performed, either remotely or on-site.

As gig and contract labor become a larger share of the workforce, these ambiguities grow, creating new disputes, legal complexities and exposure scenarios that the traditional workers' compensation framework wasn't designed to handle.

Presumption Laws

At the same time, the regulatory environment is shifting rapidly through the expansion of presumption laws, which particularly affect firefighters and first responders, create presumptive coverage to automatically presume compensability for conditions such as post-traumatic stress disorder (PTSD), certain cancers and other long-term health issues based on occupational exposure. This area represents one of the most significant legislative expansions in the workers' compensation system in decades.

As of July 31, 2024, National Council on Compensation Insurance (NCCI) monitored 64 bills related to workers' compensation and mental injuries, with 51 specifically addressing PTSD coverage.

"With the growing knowledge of PTSD, it is essential to ensure that accounts are properly priced and have adequate coverage for their potential exposures," says Palmer. "These coverage changes reflect smarter and more comprehensive coverage for individuals."

These statutory expansions reflect a broader trend: Workers' compensation is being used to fill gaps that historically fell outside the scope of insurance coverage. While these laws address clear needs in public safety, they also increase claim frequency and severity, often leaving carriers with exposures that are difficult to model and price. Combined with the rise of remote and gig work, presumption laws are pushing the industry into unfamiliar territory.

Together, these three forces shine a light on how the insurance industry is adapting to a workforce that looks fundamentally different from the one it was built to address. The traditional boundaries of workplace risk are disappearing, injuries can occur anywhere, employment can be ambiguous, and conditions once excluded or contested are now automatically presumed compensable by statute.

What's more, these trends aren't temporary — they're structural. As the workforce continues to decentralize and the regulatory landscape expands, carriers and brokers must approach workers' compensation with a forward-looking mindset. Pricing, underwriting discipline and employer education will all play central roles in navigating this new era of workplace risk.

Learn more about what's next for the workers' compensation insurance market in the 2026 Workers' Market Outlook.

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