In medium- and high-risk industries like construction, logistics, and retail, businesses are feeling the squeeze of rising claims costs. It’s not just an operational headache and a financial threat; there’s a real human cost, as well.

For context, recent data shows self-insured businesses and insurance providers are seeing more workers’ compensation claims, higher liability risks, and increasing property damage expenses. Add inflation, more lawsuits, and tougher regulations, and those costs just keep climbing.

Between 2020 and 2022, the price of materials and labor shot up by 55 percent (Insurance Information Institute), making property claims way more expensive. Insurance rates in high-risk industries have also been climbing, by an average of 12.5 percent annually (Bipartisan Policy Center), forcing businesses to absorb higher premiums and deductibles. On top of that, fraudulent claims and legal system abuse are adding even more pressure, especially when it comes to workers’ comp and liability cases (Insurance Information Institute).

For self-insured businesses, this all means setting aside more money for claims reserves, which can strain finances. For insurers, it leads to higher premiums and lower profits. The good news: There’s an easy way to get ahead of this challenge with a smarter, more proactive approach to managing claims. More on that later in this article.

What’s Driving Up Claims Costs?

One of the biggest reasons claims are getting more expensive is workplace injuries. In industries like construction and logistics, accidents happen all the time — and they’re not cheap. Strains, falls, and equipment-related injuries often lead to long recovery times, rising medical bills, and bigger disability claims. Medical costs for workers’ comp have been outpacing inflation for years, and as the workforce ages, injury severity is going up, leading to longer rehab and higher payouts.

Then there’s property and equipment damage. If you’re self-insured and working with vehicles, heavy machinery, or buildings, you know how expensive repairs can get. Inflation and supply chain issues have made it pricier than ever to fix or replace vehicles, while extreme weather events like wildfires and hurricanes are sending property claims through the roof.

To compound the problem, cargo theft has hit unprecedented levels. One particularly damaging trend is “strategic cargo theft,” where bad actors pose as legitimate carriers to steal entire shipments. These incidents are difficult to recover from and often go unresolved, putting additional financial pressure on carriers and shippers. 

The issue has grown so severe that federal lawmakers are now addressing what’s being called “Grand Theft Cargo.”

And let’s not forget about lawsuits. Legal costs are skyrocketing thanks to what’s known as “social inflation” — basically, more lawsuits, bigger jury awards, and aggressive legal tactics. Liability claims are getting hit hard, and with more third-party litigation funding out there, businesses and insurers are seeing more claims head to court, which means even higher costs.

According to insights from Adam Green, Managing Principal at EPIC Brokers, the frequency of bodily injury and property damage claims against brokers has climbed, and longstanding insurers have exited the space entirely. As a result, underwriting standards have tightened dramatically, with insurers demanding more rigorous vetting, raising premiums and deductibles, and increasingly excluding coverage for theft and fraud. 

The Human Impact of Rising Claims Costs

Behind the numbers is a very real effect on the people we all serve. Tighter budgets mean tough choices, and cost-cutting often leads to fewer resources for safety programs, delayed equipment upgrades, and even staff reductions. Workers in medium- and high-risk industries face direct consequences, with some having to operate in conditions where safety is less than ideal.

When businesses struggle to keep up with rising claims costs, the risk of workplace accidents can increase, leading to more injuries, longer recovery times, and greater financial strain on employees and their families.

For injured workers, a slow or inefficient claims process can mean delayed medical care, prolonged time away from work, and uncertainty about their financial stability. Higher insurance costs may also force businesses to raise deductibles or shift more costs onto employees, making healthcare and workers’ compensation benefits harder to access. And for small businesses, these rising costs could mean layoffs, reduced wages, or even shutdowns, affecting livelihoods and local economies.

At the insurer level, rising claims expenses mean premium hikes that get passed down to businesses and, ultimately, to consumers. When costs go up across industries like construction and logistics, it can drive up the price of goods and services for everyone. This ripple effect touches workers, businesses, and everyday people who rely on these industries.

At its core, managing rising claims costs isn’t just about protecting a company’s bottom line — it’s about protecting the people behind the business. A smarter, more proactive approach to claims management can help ensure that employees get the care they need, businesses stay financially stable, and industries continue to thrive without unnecessary risk or hardship.

How to Keep Claims Costs Under Control

So, what can businesses do to fight back? It all starts with being proactive.

Preventing accidents before they happen is the best way to keep costs down. Companies in high-risk industries can offer regular safety training and refresher courses, use wearable safety technology to track worker fatigue and posture, and implement AI-driven video monitoring to spot risky behavior. 

One of the most effective ways to prevent future claims is to learn from past ones. Incident-based claims and risk management (Cloud Claims) helps businesses do just that by tracking and analyzing every reported incident — whether it results in a claim or not. By capturing near-misses, minor injuries, and equipment failures in real time, companies can identify patterns and root causes before they escalate into costly claims. This proactive approach allows safety teams to address risks early, implement targeted training, and make data-driven decisions to improve workplace safety.

Beyond prevention, incident-based tracking also streamlines claims handling when accidents do happen. By having detailed incident reports readily available, businesses can ensure accurate documentation, reduce disputes, and speed up the claims resolution process. Over time, this leads to fewer repeat incidents, lower claims costs, and a safer work environment for everyone.

Take Control of Your Claims Costs

At the end of the day, businesses and insurers in medium- and high-risk industries need to take a multi-pronged approach to managing claims. That means: preventing claims before they happen with better visibility, stronger safety programs, and better risk analytics; and streamlining claims handling to cut down on delays and unnecessary expenses.

At APP Tech, we’ve helped hundreds of businesses and organizations across North America take control of claims costs with smart automation, incident-based tracking, and intelligent claims triage. If you’re ready to reduce claims expenses and get ahead of rising costs, let’s talk.