Workers' Compensation: AIG Remains in Workers' Compensation

The 2012 Prediction That Didn't Come True

In March 2012, a blog post "best week," predicted that AIG—then the third-largest excess workers' compensation insurance carrier—was exiting the market due to medical cost instability and the advent of national healthcare reform. The post suggested this could be "the first of many obituaries for the nation's patchwork of workers' compensation programs."

That prediction was wrong.

What Actually Happened: AIG Still Thrives in Workers' Comp

Fast forward to 2026, and AIG remains firmly entrenched in the workers' compensation market. Not only did the insurance giant stay in the game, but it has also:

Continued offering workers' compensation insurance across multiple states
Partnered with Professional Employer Organizations (PEOs) to expand its workers' comp coverage
Maintained active claims management systems serving employers and injured workers nationwide
Transferred claims administration to Gallagher Bassett in 2022 to streamline operations

Far from being an "obituary," the workers' compensation market has enjoyed nearly a decade of sustained profitability.

Impact on Workers' Compensation Claims: What Changed

The landscape for workers' compensation claims looks dramatically different today than the dire predictions of 2012 suggested:

1. Medical Costs: Managed, Not Catastrophic
While medical inflation remains a concern, it hasn't destroyed the system. According to the National Council on Compensation Insurance (NCCI):

Workers' comp medical costs have been managed through state fee schedules
Medical inflation in workers' comp has actually been lower than overall healthcare inflation
The combined ratio for the workers' compensation market remained at 86% in 2023—the seventh consecutive year below 90%

What this means for injured workers: Claims are being paid consistently. The system remains solvent and accessible for workplace injuries.

2. The Affordable Care Act Effect: Unexpected Benefits
The predicted chaos from the Affordable Care Act (ACA) never materialized. Instead, research shows:

Workers' compensation fraud claims decreased because workers with health insurance stopped misclassifying personal injuries as workplace incidents
Claims frequency dropped in industries most affected by the ACA
Access to preventative care reduced workplace injuries (obesity prevention programs alone reduced workers' comp costs by 3-4%)
In Massachusetts, workers' comp claims decreased by 16.7% and hospital costs fell 5-10%

What this means for injured workers: Fewer fraudulent claims mean legitimate workplace injury claims are processed more efficiently and fairly. Workers with health insurance are less likely to game the system, protecting benefits for truly work-related injuries.

3. Current Challenges: Different Than Predicted
Today's workers' compensation system faces different challenges than those imagined in 2012:

Aging Workforce: Employees aged 60 and older saw a 2.8% increase in claims in 2024, with 35% higher average medical costs and longer disability periods.
Physician Shortages: The Association of American Medical Colleges projects a shortage of up to 86,000 physicians by 2036, though treatment timelines haven't been impacted yet. States are expanding provider definitions to include physical therapists and nurse practitioners.
Mental Health Claims: 41 states now have laws addressing occupational mental health, expanding coverage for work-related psychological conditions.
Social Inflation: Some injured workers are bypassing workers' compensation to pursue civil litigation where potential payouts are higher, creating new legal challenges for employers.

What this means for injured workers: While challenges exist, they're being actively addressed through regulatory changes and system adaptations. Treatment access remains stable, and coverage is expanding for previously excluded conditions like mental health injuries.

4. Claims Administration Changes
In September 2022, AIG transferred its claims administration to Gallagher Bassett. This transition created temporary challenges:

New claim numbers were assigned to all former AIG claims
An 11-day gap existed between when AIG stopped and Gallagher Bassett began administering claims
Providers had to adjust billing systems and clearinghouse connections

What this means for injured workers: If you have an old AIG claim, it's now managed by Gallagher Bassett. Contact information and claim numbers may have changed, which could affect bill payments and medical authorizations.

5. Market Stability Benefits Claimants
The workers' compensation market has remained remarkably stable:

Premium rates have stayed flat or decreased modestly for most industries
Lost-time claim frequency declined by 8% in 2023
The system recorded $18 billion in reserve redundancy, ensuring long-term solvency

What this means for injured workers: A financially healthy insurance market means claims will be paid, benefits are secure, and the system isn't facing the crisis predicted in 2012.

The Bottom Line for Workers' Comp Claims

The 2012 prediction of AIG's exit signaling the collapse of workers' compensation was fundamentally wrong. Instead:

✓ AIG stayed in the market and continues serving policyholders
✓ Medical costs were controlled through fee schedules and managed care
✓ The ACA improved the system by reducing fraud and promoting preventative care
✓ Claims are being paid from a profitable, stable market
✓ New challenges are emerging but are being actively addressed

For workers injured on the job, this means the system remains accessible and viable. While individual claims still require proper documentation and can face denials, the overall infrastructure supporting workers' compensation is stronger than doomsday predictions suggested.

The real lesson? Major insurance carriers aren't abandoning workers' compensstion. The system adapted, evolved, and continues protecting injured workers across America.

Validated Resources

For more information about workers' compensation trends and claim management:

AIG Workers' Compensation Claims: https://www.aig.com/home/claims/workers-compensation-claims
National Council on Compensation Insurance (NCCI): Reports on state-level workers' comp statistics
Workers Compensation Research Institute (WCRI): https://www.wcrinet.org — Independent research on medical costs and claim trends
Sedgwick 2025 Workers' Comp Trends: https://www.sedgwick.com/blog/navigating-workers-compensation-in-2025-four-hot-topics-shaping-the-future/