How AI and Data Are Reshaping Workers’ Compensation Fraud Detection

Workers’ compensation fraud is costing insurers between $35 billion and $44 billion annually, according to a new report by Conning. The 2025 Workers’ Comp Study: Using Data & AI to Fight Workers’ Compensation Insurance Fraud reveals how insurers are increasingly turning to artificial intelligence and advanced analytics to stay ahead of evolving fraud schemes.

AI and machine learning technologies are now central tools in fraud detection, enabling insurers to process massive amounts of claims data to uncover anomalies and suspicious patterns. These systems help identify potential fraud early in the claims process by using predictive modeling and assigning risk scores. This allows insurers to prioritize high-risk cases while streamlining legitimate claims—improving both efficiency and customer experience.

The report also points to a growing emphasis on collaboration and data-sharing across the insurance industry. By working closely with law enforcement and regulatory agencies, insurers can improve their fraud detection capabilities and accelerate investigations. The shift toward a more proactive, data-driven approach reflects a broader trend in workers’ comp: focusing on prevention rather than reaction.

As fraudsters adopt more sophisticated tactics, insurers who invest in AI, big data, and real-time analytics are likely to see improved fraud mitigation, operational efficiency, and profitability. The study suggests that embracing technology is becoming not just a strategic advantage, but a necessary step in maintaining market stability.